Signs the Eurozone debt crisis is worsening

Asian stocks fell for a fourth day as HSBC Holdings Plc cut its outlook for China’s economy, South Korean consumer confidence dropped and German Chancellor Angela Merkel hardened her resistance to euro-area debt sharing before European leaders meet this week. “There’s increasing concern that the EU summit won’t work out concrete measures to overcome the debt crisis as there has been no change in Germany’s resistance to euro-zone debt sharing,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.

In signs the debt crisis is worsening, Cyprus said it will seek a financial lifeline from the euro area’s firewall funds. Greek Prime Minister Antonis Samaras agreed to the resignation of his finance minister, Vassilios Rapanos, on health grounds.

“It’s not a bold prediction to say that in Brussels most eyes -- all eyes -- will be on Germany yet again,” Merkel said at a conference in Berlin. “I say quite openly: when I think of the summit on Thursday I’m concerned that once again the discussion will be far too much about all kinds of ideas for joint liability and far too little about improved oversight and structural measures.”

Italy is scheduled to sell inflation-linked securities maturing in 2016 and 2026 today as well as €3 billion of zero-coupon bonds. Spain will offer three- and six- month bills.

Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA, Spain’s largest lenders, were downgraded yesterday by Moody’s, which lowered at least a dozen lenders to junk status. The ratings company cut six banks by four levels and 10 by three grades with the rest getting one- and two-step declines.

Source: Bloomberg