(Reuters) - Asian shares were flat and the euro pressured on Wednesday as investors seemed convinced a European summit this week will fail to take concrete action to solve the euro debt crisis, with Germany staunchly opposed to sharing the region's debt burden.
MSCI's broadest index of Asia-Pacific shares outside Japan was flat while Japan's Nikkei average opened up 0.2 percent.
"Investors are waiting for the conclusion of the EU summit, even though they aren't expecting anything concrete to come out of it," said Yoshihiro Ito, chief strategist at Okasan Online Securities, adding that there were few factors other than exchanges rates to influence trading this session.
In Seoul, the market level near 1,800 points showed stocks were trading very cheaply and were ripe for bargain-hunting, said Cho Sung-joon, an analyst at NH Investment & Securities.
European Council President Herman Van Rompuy on Tuesday released a report on closer fiscal and banking union, envisaging a euro zone treasury that would issue common debt in the medium term. But Germany, two days before the June 28-29 summit, flatly rejected the idea of common euro zone bonds.
German Chancellor Angela Merkel said Europe would not share total debt liability "as long as I live".
Her comments further convince investors that the Brussels summit is likely to produce little. The summit will be the 20th time EU leaders have met to try to resolve a crisis that has spread across Europe since it began in Greece in early 2010.
SUMMIT OFFERS NO "MAGIC" SOLUTION
Nervous investors pushed Spanish short-term borrowing rates to their highest in more than six months on Tuesday and yields on Italy's new two-year paper to a new high since December. Italy will sell six-month bills on Wednesday and face a more challenging offer of five- and 10-year debt on Thursday.
The euro eased 0.1 percent at $1.2486, hovering near its lowest against the dollar in more than two weeks of $1.2441 hit on Tuesday, while the dollar index measured against a basket of key currencies inched up 0.1 percent to 82.423.
"Global risk sentiment is trading sideways with a negative tone ahead of Thursday's European summit," said Barclays Capital analysts in a research note.
"This seems consistent with our 'muddle through' scenario in which no magic solution is likely to come from the upcoming summit, forcing troubled governments to push through reforms and austerity, as Germany continues to resist the fiscal transfers needed to place euro area in a solid recovery path."
In Greece, a veteran economist dubbed "Mr Euro" for his participation in the team that negotiated Athens' entry into the euro in 2001, Yannis Stournaras, was appointed as its new finance minister on Tuesday.
The move comes at a crucial time for the country which is only weeks away from running out of cash and in desperate need of a capable minister to renegotiate the harsh terms of a financial bailout with global lenders.
European worries continued to take a toll on the global economy as reflected in mixed data from the United States.
The S&P/Case Shiller U.S. home prices index picked up in April for the third month in a row to suggest a recovery in the housing market, but data showed consumer confidence fell to its lowest in five months in June, revealing a fragile U.S. economy.
U.S. crude futures were down 0.1 percent at $79.31 a barrel and Brent crude inched down 0.2 percent at $92.87 a barrel on Wednesday.
Asian credit markets firmed slightly, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing by 2 basis points early on Wednesday. (curtsey : reuter)
Rupesh Yatesh Dalal
Head Research Department
