Asian stocks were mostly lower and the euro sagged on Tuesday as barely perctible progress on talks between debt-strapped Greece and its creditors kept investors edgy. Spreadbetters expected jitters over Greece to continue weighing on Europe, forecasting a slightly lower open for Britain's FTSE, Germany's DAX and France's CAC. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent. Decliners included shares in South Korea, Hong Kong, Malaysia and Thailand, while Chinese equities bucked the trend and rose modestly. In a closely-watched Eurogroup meeting on Monday, euro zone finance ministers welcomed progress in negotiations between Greece and its creditors but said more work is needed to close a cash-for-reform deal. "It acknowledged progress, but any further development will depend on a positive conclusion to a review of the current program. In other words, the story remains unchanged," Richard Cochinos, head of Americas G10 FX strategy at Citi, wrote in a note to clients. While Greece said on Monday it repaid about 750 million euros to the International Monetary Fund, the absence of a clear breakthrough in negotiations made it an anxious wait for markets worried that Athens would eventually run out of cash and default on its debts. "Barring an unforeseen shock, Greece should be able to carry on negotiations into June, but cash positions are low. Based on our expectations debts will have significant trouble being met beyond mid-June," Cochinos at Citi said. Japan's Nikkei lost 0.3 percent, with volatility in the bond markets of many developed countries also a cause of concern. A recent sharp spike in euro zone bond yields from record lows have shaken other key debt markets such as U.S. Treasuries, which saw the 30-year bond yield climb to a six-month high. Elevated U.S. yields mean higher borrowing costs that could hurt shares not on just Wall Street but in many other markets as well. "We are potentially at a crossroads. If U.S. monetary policy begins to tighten, U.S. equity markets may have trouble rallying, which could translate to some caution in other equity markets including Japan," said Stefan Worrall, director of equity at Credit Suisse in Tokyo. China was another factor on investors' radar after Beijing cut interest rates for the third time in six months on Sunday. While the latest easing has generally been welcomed by global investors, concerns remain about the outlook for the economy as it heads for its weakest annual growth in 25 years. Wall Street shares slipped after the Eurogroup meeting, with the Dow and S&P 500 each shedding 0.5 percent. In currencies, the euro was down 0.2 percent at $1.1183 . The common currency surged to a two-month high of $1.1392 on Thursday when markets were focused on improving prospects for the European economy and surging euro zone bond yields. The dollar was little changed at 120.19 yen after climbing modestly overnight as U.S. Treasury yields rose ahead of $64 billion in new debt supply hitting the market this week. The New Zealand dollar hovered near a two-month low of $0.7328 . Increasing speculation that the country's central bank would eventually cut rates has recently pummeled the kiwi. In commodities, U.S. crude, which hit a five-month high of $62.58 last week on a weakening in the dollar, lost 2 cents to $59.23 a barrel on concerns on overabundant supply. Oil could suffer more losses if the Organization of the Petroleum Exporting Countries monthly report due later in the day shows a rise in production. Source: Reuters
