Asian stocks fall on ratings cuts of eurozone countries

Asian stock markets have fallen after Standard & Poor\'s cut the credit rating for France and a number of other European countries. Japan\'s Nikkei 225 index shed 1.5%, South Korea\'s Kospi index fell 0.8%, while Australia\'s ASX 200 lost 1.2%. Taiwan\'s main market shed 0.8% despite opening higher after its president was re-elected for a second term. Analysts have warned that markets will remain volatile in 2012 until the eurozone issues are resolved. On Friday, S&P\'s said France was being downgraded by one notch, to AA+. France still has a top AAA rating from the other two main ratings agencies, Moody\'s and Fitch. S&P\'s also cut its ratings for Italy, Spain, Cyprus, Portugal, Austria, Slovakia, Slovenia and Malta. Credit ratings are used by banks and investors to decide how much money to lend to particular borrowers. The rating downgrade by S&P also had an impact on the euro. The single currency, which has been under pressure since the outbreak of the eurozone debt crisis, was trading at 97.12 against the yen and at $1.264 against the US currency in Asian trade. The euro has fallen 19% against the Japanese yen since May last year. That does not bode well for Japanese exporters who rely heavily on demand from the eurozone region. A weaker euro not only makes their goods more expensive for European buyers but also hurts profits of the manufacturers. Analysts said the continued weakness and volatility in the single currency was also denting investor sentiment. \"It\'s difficult to see the euro snapping back and gaining any time soon, which creates worries for major exporters,\" said Ryota Sakagami of SMBC Nikko Securities. Among Japanese shares, exporters were the hardest hit, with electronics maker Sony down by 2.3%, Toyota falling 1.5% and Canon shedding 2.2%.