Market Rumour

Foreign investors have been snapping up Japanese shares at the fastest pace in two years, bargain-hunting blue-chips after the market lagged the rest of Asia in 2009, but the buying is unlikely to continue at this rate.Fund managers are bringing their portfolios closer to neutral on Japan after having been heavily underweight in 2009, pulling funds out of other Asian markets in the past few months. But once the initial rush is over, shares such as tech stocks are still seen in demand as investors target individual growth stories.Strong earnings at blue-chip technology firms, such as Canon , are expected to benefit from a broad worldwide recovery. Those companies have slashed costs and have a longer pedigree and stronger business than their emerging Asian peers.

Global stocks plunged and the euro hit an eight-month low against the dollar on Thursday as concern over Greece's fiscal woes spread to other highly indebted euro zone countries. An intensified focus on sovereign credit and rising government deficits fuelled widespread investor flight from risk, boosting U.S. Treasuries and the Japanese yen as safe havens. The European Union said on Wednesday that Greece's plans to cut its budget gap from 12.7 percent of gross domestic product in 2009 to below 3 percent in 2012 would not be easy to implement but vowed to hold Athens to its pledges. The persistent pall over Greece led investors to reduce risk elsewhere, especially in debt-burdened Spain and Portugal. "This is a sovereign problem, and it's hitting everything," said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California. "If other European countries are having trouble like Greece, then it's a big problem for banks, and the banks are the foundation for everything. European banks will be in trouble and that will carry over to all stocks." The euro fell more than 1 percent to $1.3739 after earlier hitting its lowest in more than eight months at $1.3729. The dollar .DXY rose 0.75 percent against a basket of major currencies but fell 2.2 percent against the yen, to 88.93 yen. Political tension in Portugal over a regional spending bill and a climb-down by the Spanish government over pension reform added to the woes of peripheral euro zone states facing huge challenges to curb budget shortfalls.