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NZ dollar tumbles on quake fears

Tuesday, February 22, 2011 - 02:00

Feb 22 - New Zealand dollar tumbles over 2 percent on fears quake damage will dent fragile confidence in the economy; exposed Australian banks and insurers fall on default and claim worries. Arnold Gay reports.

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The New Zealand dollar tumbled alongside local and Australian stocks, after an earthquake struck Christchurch. This is the second quake to hit the city in 5 months. This time though, the quake has taken dozens of lives, with New Zealand Prime Minister John Key fearing the toll could rise further. (SOUNDBITE) (English) NEW ZEALAND PRIME MINISTER JOHN KEY, SAYING: "The death toll I have at the moment is 65, and that may rise. So look, it's an absolute tragedy for this city, for New Zealnd, for the people that we care so much about." The tremor struck at lunchtime, with scores of Christchurch's, near 400,000 population, up and about. The New Zealand currency shed over 1.7 percent over fears confidence in the already fragile economy could be dented, although credit rating agency Fitch said the tremor would not trigger a downgrade of New Zealand's sovereign rating. The 6.3 magnitude quake also weighed on Australian banks and insurers with large exposure to New Zealand. Investors sold down their shares after the tremor toppled buildings, and sparked fires, raising investor concern over bank defaults and mounting insurance claims. The quake's epicentre was just 10 km from the city centre. (SOUNDBITE) (English) UNIDENTIFIED MAN, SAYING: "The floor just went from underneath you, and then the ceiling just came down to meet them, and we were in a spot, about three feet. And that was it. But luckily we were sort of not at the edge of the building. Which I think we would have been at the edge of the building, rather than the about 2 metres in we would have been squashed." All of Australia top 4 banks, including National Australia and Westpac, have large New Zealand operations. Australian insurers like IAG and Suncorp were over two percent lower. The previous earthquake in Christchurch last September cost insurers an estimated $1 billion, though most it was covered by reinsurance. Arnold Gay, Reuters.

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NZ dollar tumbles on quake fears

Tuesday, February 22, 2011 - 02:00