Asian stocks sink after Europe credit downgrades

Asian stocks sank Monday after a ratings downgrade rattled Europe and crucial talks aimed at nudging Greece toward solvency were mired in disagreement.

Japan's Nikkei 225 index slid 1.7 percent to 8,364.51 and Hong Kong's Hang Seng lost 1 percent at 19,009.58. South Korea's Kospi index dropped 1.6 percent to 1,846.66. Benchmarks in Taiwan and mainland China also fell.

Standard & Poor's decision Friday to strip France of its top-notch credit rating and to downgrade eight other nations that use the euro battered investment sentiment, raising fears that a solution to the continent's sovereign debt crisis may be far off.

A collapse appeared imminent in negotiations between the Greek government and its private creditors on a bond swap.

Without the swap, debt-crippled Greece is unlikely to secure a second financial bailout — which could hurl the country to a bankruptcy that would send economic shock waves around the world. Greece's first bailout came in 2010.

"There is growing risk of a disorderly default by Greece, with talks reportedly breaking down after private sector creditors could not agree on the coupon level of fresh bonds," said Stan Shamu of IG Markets in Melbourne, Australia.

"With a euro14.4 billion bond repayment due in March, and without restructuring in place, the entire sum would fall, making it increasingly likely that Greece will default," Shamu wrote in a email.

Improving monthly machine orders in Japan did little to stem worries. Core private sector machinery orders, excluding shipbuilding and electricity, rose 14.8 percent in November. That was the fastest growth since January 2008, the government said.

In energy trading, benchmark oil rose 15 cents to $98.85 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 40 cents to close at $98.70 per barrel in New York on Friday.

The euro fell to $1.2646 from $1.2670 late Friday in New York. The dollar fell to 76.83 yen from 76.96 yen.