BANGKOK ? Asian stocks stalled Tuesday after comments on Greece by Standard & Poor's underlined that the debt laden country may be unable to avoid defaulting.
Oil prices hovered below $95 a barrel in Asia, while dollar rose against the yen and the euro.
Japan's Nikkei 225 dropped narrowly to 9,962.02, a small retreat from Monday's two-month high as investors sought to cash in profits a day after the index briefly rose above the 10,000 mark for the first time since May 5.
As few trading cues were available from Wall Street, which was closed Monday for a holiday, markets were focused on Greece. Sentiment last week was buoyed after the country's lawmakers backed austerity measures required from international creditors in return for emergency cash, which diminished fears of a broader European crisis.
That changed Monday, however, when credit ratings agency Standard & Poor's warned that a proposal by French banks to help Greece with its financial crisis would likely amount to a debt default.
Some analysts, however, said they believed that a Greek default was inevitable, no matter what aid was provided, and that such a default has already been factored into markets.
"The S&P is doing the right thing because Greece is really not able to pay its debts. That is why they should be in default, even though there are rescue packages," said Jackson Wong, vice president at Tanrich Securities in Hong Kong. "We already know this fact, so it was a little bump in the situation."
South Korea's Kospi rose 0.5 percent to 2,155.54. Samsung Electronics Co., the top global manufacturer of flat screen televisions, memory chips and liquid crystal displays, rose 2.1 percent. Hynix Semiconductor Inc., one of the world's leading memory chip makers, jumped 3.3 percent.
Hong Kong's Hang Seng slipped slightly to 22,764.18, with banking shares sliding after Moody's Investor Service said Beijing's estimate of local government debt was likely too low ? raising concerns that Chinese banks could be hurt if borrowers cannot repay loans.
Shares of Hong Kong-listed Industrial and Commercial Bank of China, the world's biggest bank by market value, dropped 0.7 percent. China Construction Bank Ltd., the country's third-biggest commercial lender, lost 0.8 percent.
While a majority of loans to local Chinese governments are assumed to be of good quality, "we conclude that the banks' exposure to local government borrowers is greater than we anticipated," a Moody report quoted vice president Yvonne Zhang as saying. The agency views the outlook for the Chinese banking system "as potentially turning to negative."
Attention will turn to U.S. jobs data Friday. After a string of mostly poor economic indicators in recent weeks, investors will be looking for indications on the health of the U.S. recovery.
On Thursday, the European Central Bank is expected to raise its main interest rate by a quarter of a percentage point for the second time since April.
Benchmark oil for August delivery was down 1 cent at $94.93 a barrel in electronic trading on the New York Mercantile Exchange. Crude last settled down 48 cents at $94.94 on Friday.
In currencies, the euro dropped to $1.4469 from $1.4511 late Thursday in New York. The dollar strengthened to 81.08 yen from 80.84 yen.
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