Asia stocks fall as Italy, Spain bond costs rise

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Asia stocks fall as Italy, Spain bond costs rise

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Asian markets fell as fears that Greece will engulf bigger economies such as Spain and Italy raised.

31 May,2012 08:36 am

Spains banking system is under strain a week after Bankia, its fourth-largest bank, required $23.8 billion in government aid to cover souring real estate loans.Investors are increasingly worried that problems might surface at other Spanish banks. Many lent heavily during the nations real estate bubble and losses from the real estate crash might be too big for Spains government to shoulder.Another negative signal came from the European Central Bank, which said Spaniards pulled billions in deposits out of their banks last month, raising concerns of a larger bank run.On Wednesday, borrowing rates rose sharply for Spain and Italy, a sign that investors are increasingly uneasy about their ability to pay off their debt.Japans Nikkei 225 index tumbled 1.9 percent, also hit by a stronger yen which erodes the profits of the countrys exporters. Mazda Motor Corp. plunged 5.8 percent and Canon Inc. fell 4.4 percent.Hong Kongs Hang Seng lost 1.4 percent to 18,423.61 and South Koreas Kospi was down 1.3 percent at 1,821.32.Australias S&P/ASX 200 shed 1.1 percent to 4,051. Benchmarks in Singapore, Taiwan, mainland China, Indonesia and the Philippines also fell.Energy shares fell on lower oil prices. Hong Kong-listed Sinopec, Asias biggest oil refiner, fell 1.8 percent. China National Offshore Oil Corp., or CNOOC, lost 2.7 percent.The Dow Jones industrial average closed down 1.3 percent Wednesday at 12,419.86. The Standard & Poors 500 index lost 19.10 points to 1,313.32.The Nasdaq composite index fell 33.63 to 2,837.36. Rising demand for safe investments pushed the yield on the benchmark 10-year Treasury note down to 1.61 percent, apparently the lowest since World War II.Benchmark oil for July delivery was down 19 cents to $87.63 per barrel in electronic trading on the New York Mercantile Exchange. The contract slid $2.99 to close at $87.82 on the Nymex on Thursday.On Wednesday, the euro plunged below $1.24 for the first time in nearly two years as traders fretted over Spains economy. The euro fell to $1.2369 from $1.2382 late in the day in New York. The dollar fell to 78.75 yen from 79.07 yen.