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Asian markets, euro hit as Greece set for new vote

Asian markets fell Wednesday and the euro was stuck at four-month lows on news Greece will go to the polls again after talks to form a coalition failed, stoking fears it will exit the eurozone.

The developments came as France's new pro-growth President Francois Hollande held his first talks with German Chancellor Angela Merkel, the main proponent of austerity, to find common ground on tackling the crisis.

Tokyo closed down 1.12 percent, or 99.57 points, at 8,801.17 while Sydney was 2.36 percent lower, or 100.8 points, at 4,165.5.

Seoul closed 3.08 percent lower, easing 58.43 points to 1,840.53.

In afternoon trade Hong Kong was 3.03 percent lower and Shanghai was down 0.58 percent. The Shanghai Composite Index, which covers both A and B shares, lost 13.77 points to 2,361.08.

Greece must hold fresh elections after talks on forming a new government broke up without agreement Tuesday, prolonging a tortuous crisis.

The new polls, expected on June 17, follow an inconclusive election on May 6 when a majority of Greeks voted against harsh austerity measures Athens took on in return for a huge European Union-International Monetary Fund bailout.

"We are going again towards elections... under very bad conditions," Pasok party leader Evangelos Venizelos said after the last-ditch talks failed.

"The Greek people must now make the right decisions for the good of the country," stressed Venizelos, who supported the EU-IMF deal in a technocrat government formed last November.

In the meantime the country will be run by a caretaker administration.

Most polls indicate a new vote -- expected in the middle of June -- will see anti-austerity parties improve on their surprising performance in this month's polls, when 70 percent of the electorate voted against the swingeing cuts.

Such an outcome would likely see the bailout deal ripped up and Greece default on its debt obligations before eventually exiting the eurozone.

The precarious financial situation was also highlighted when President Carolos Papoulias said about 700 million euros ($894 million) had been withdrawn from Greek banks on Monday and warned the situation could worsen in coming days.

Despite the global market pessimism Merkel and Hollande, who flew to Berlin hours after his inauguration Tuesday, stressed their desire to keep the eurozone together.

Eyes were on the first meeting between the heads of the eurozone's biggest economies after Hollande defeated Nicolas Sarkozy in last week's election.

Merkel was a Sarkozy ally and the architect of the European Union's fiscal austerity drive. Hollande opposed the speed and depth of the cutbacks demanded by Berlin, and wants to renegotiate the region's fiscal pact.

Germany is committed to budgetary discipline, and Merkel has repeatedly insisted since Hollande's election that the pact, signed by 25 of the 27 EU countries and already ratified in some, is not open to renegotiation.

On currency markets the euro fell in Asian trade to its lowest since mid-January.

The euro bought $1.2715 in Tokyo afternoon trade, compared with $1.2728 in New York late Tuesday.

The common currency fetched 102.16 yen against 102.12 yen, while the dollar was changing hands at 80.40 yen, slightly up from 80.23 yen late Wednesday in New York.

The Dow closed down 0.50 percent, the S&P 500 fell 0.57 percent and the Nasdaq lost 0.30 percent.

In Europe London's benchmark FTSE 100 eased 0.51 percent, the Frankfurt DAX 30 dropped 0.79 percent and the CAC 40 in Paris fell 0.61 percent while Milan's FTSE Mib slumped 2.56 percent and the IBEX 35 in Madrid slid 1.6 percent.

On oil markets New York's main contract, West Texas Intermediate crude for delivery in June was down $1.33 to $92.65 per barrel while Brent North Sea crude for June shed $1.15 to $111.09 in afternoon trade.

Gold was at $1,534.01 an ounce at 0615 GMT, compared with $1,558.71 late Tuesday.

In other markets:

-- Wellington closed down 20.41 points, or 0.58 percent, at 3,514.51.

Telecom Corp fell 1.17 percent at NZ$2.565 and Fletcher Building was down 0.48 percent at NZ$6.23.

-- Taipei fell 161.07 points, or 2.18 percent, at 7,234.57.

Leading smartphone maker HTC shed 6.59 percent at Tw$411.0 while Taiwan Semiconductor Manufacturing Co lost 2.46 percent at Tw$83.4.


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