Asian markets fall in early trade as Greece remains in spotlight

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.6 percent. Japan's Nikkei dipped 0.5 percent. Despite household spending rising more than expected, inflation has remained flat, keeping alive expectations for more central bank stimulus later this year. Volatile Chinese stocks, which often march to their own drum beat, tumbled more than 4 percent at one point in early trade as the market struggled to digest a flood of IPOs, tighter cash supply and confusion about government and central bank policy direction. Australian shares lost 1.5 percent, while South Korea's Kospi bucked the trend and gained 0.3 percent. (A Reuters file pic shows a pedestrian in front of an electronic boards showing Japan's Nikkei average (L) and the exchange rates between the Japanese yen against the U.S. dollar (R) outside a brokerage in Tokyo June 24)

Earlier report:

TOKYO: Asian equities fell on Friday as Greece failed again to reach an agreement with its creditors and stumbled toward a default, while major currencies like the euro and dollar drifted as the debt saga sidelined investors.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent.

Japan's Nikkei dipped 0.1 percent. Despite household spending rising more than expected, inflation has remained flat, keeping alive expectations for more central bank stimulus later this year.

Australian shares lost 0.9 percent, while South Korea's Kospi bucked the trend and gained 0.2 percent.

Last-ditch talks will resume on Saturday either avert a Greek default next week - Athens has to repay the International Monetary Fund on Tuesday - or start preparing for a "Plan B" to protect the euro zone from financial market turmoil.

A breakdown in talks on Thursday again revealed the wide gap in understanding between Greece and its creditors, highlighting the prospect of Athens refusing to accept any proposed concessions. Commentators also pointed to the fact that the German parliament has to ratify any changes first before paying for a bailout.

"This all points to a significant risk that Greece will fail to make its June 30th payment to the IMF and go into technical arrears," economists at Capital Economics wrote.

The euro was flat at $1.1203 , stuck within a tight $1.1235-1153 range for the third day. It was poised to end the week about 1.2 percent lower.

The dollar was also little changed, last trading at 123.57 yen and hemmed in a 124.38-122.56 range this week.

With Greece in the spotlight once again, upbeat U.S. data that could have otherwise lifted the dollar by fanning hopes for a rate hike by the Federal Reserve was relegated to the background.

Figures on Thursday showed U.S. consumer spending recorded its largest increase in nearly six years in May, further evidence that economic growth was accelerating in the second quarter.

In commodities, U.S. crude extended losses to the third day with weaker U.S. refined fuels markets and potential negative impact from Greece's debt crisis on European energy demand taking a toll.

U.S. crude shed 2 cents to $59.68 a barrel.- Reuters