Indian stocks pare gain on Eurozone concern

Indian stocks dropped for a second day on concern that the debt crisis in Europe, the nation's biggest trading partner, is worsening. Reliance Industries, the nation's biggest company, slumped 2.3 per cent. Stocks in Europe and Asia declined after UniCredit, Italy's largest bank, said on Wednesday it will sell new shares in a €7.5 billion (Dh35.81 billion) offer to strengthen its capital position and Prime Minister Lucas Papademos said Greece is at risk of a "disorderly default". Australia's services industry shrank and the euro weakened ahead of France's plans to sell as much as €8 billion of debt yesterday. The BSE India Sensitive Index, or Sensex, fell 25.56, or 0.2 per cent, to 15,857.08 at the close in Mumbai, paring its advance this week to 2.6 per cent. The measure gained as much as 0.6 per cent on Wednesday. Europe's debt crisis "is a 10-year problem. It's not a two-quarter problem", Philip Poole, head of investment strategy at HSBC Global Asset Management, said on Bloomberg Television in Hong Kong. "We still don't see fully the route to a solution. There's still more work to be done, it's going to take time, and in the interim it's going to be an overhang to the market." The Sensex slumped 25 per cent last year on concern a weak rupee and a record interest-rate increases will exacerbate the effects of Europe's debt crisis on company earnings. The rupee dropped the most among major Asian currencies in 2011. UniCredit led European banks lower amid concern that more lenders will be forced to raise capital. The lender, which announced a rights offer at a 43 per cent discount on Wednesday, plunged to a 19-year low. The Stoxx Europe 600 Index fell 0.7 per cent and the MSCI Asia Pacific Index lost 0.8 per cent. Collapse In Greece, Papademos said that deeper cuts in incomes are the only way for the country to stay in the euro area and get more financing from international creditors. These steps are necessary to avert an economic collapse that may otherwise come as soon as March, he said. While as many as 17 of 30 Sensex companies retreated, the S&P CNX Nifty Index on the National Stock Exchange of India was little changed at 4,749.95. The BSE-200 Index was unchanged at 1901.91.