Tokyo fell 0.22%, or 19.95 points, to 8,568.89, Sydney closed 0.53%, or 21.6 points, lower at 4,042.2 and in the afternoon Hong Kong was 0.79% down while Shanghai eased 0.86%.
However, Seoul gained 0.65%, or 12.16 points, to 1,871.48.
With the eurozone’s US$125 billion loan for Spain’s banking sector almost a distant memory, the country has seen its borrowing costs surge to unsustainable levels and traders are growing concerned about its own financial state.
Yesterday, Madrid was dealt another blow when Moody’s slashed its credit rating by three notches to just one level above junk status, saying the bailout will add to an already shaky debt position.
Spanish 10-year government bond yields – the rate of return earned by investors – spiked to 6.834% on Tuesday, the highest since the eurozone was founded, and were still sitting at 6.712 today.
Anything above 6.0% is considered too high to continue servicing its debts for the medium term and point to investors’ concerns about Spain’s future as unemployment sits at record highs and public debt rockets.
Eyes are also on Sunday’s elections in Greece – its second in six weeks – with dealers fearing a victory for anti-austerity parties that could lead to Athens tearing up a bailout deal, which in turn would likely lead it to exit the eurozone.
French President Francois Hollande said in an interview with Greek Mega Channel television that if it appears from the vote that they do not want to respect the bailout deal “there will be countries in the eurozone which would prefer to end Greece’s presence in the eurozone”.
In a transcript of the interview provided by his office, he added that “the abandoning pure and simple of the (bailout and austerity) memorandum would be seen by many eurozone members as a break up”.
The euro bought US$1.2560 in afternoon trade, slightly up from US$1.2556 in New York late yesterday. The common currency was fetching 99.72 yen against 99.78 yen.
The dollar was at 79.40 yen against 79.46 yen.
On Wall Street the major indexes fell on the European concerns as well as weak domestic figures.
The Dow closed down 0.62%, the S&P 500 lost 0.70% and the Nasdaq slipped 0.86%.
Traders went into selling mode after May retail sales fell 0.2% from April, and excluding autos shed a heftier 0.4%, the Commerce Department reported.
On oil markets New York’s main contract, light sweet crude for delivery in July, was up 20 US cents at US$82.82 a barrel and Brent North Sea crude for July delivery gained 42 US cents to US$97.55 in the afternoon.
Gold was worth US$1,619.90 an ounce at 0630 GMT, compared with US$1,609.60 late yesterday.
In other markets:
- Taipei fell 0.19%, or 13.73 points, to 7,075.10. Taiwan Semiconductor Manufacturing Co lost 1.0% at Tw$79.2 while Hon Hai Precision edged down 0.12% to Tw$82.1.
- Wellington ended 1.02%, or 34.36 points, higher at 3,416.09. Fletcher Building was up 0.33% at NZ$6.15, Telecom Corp rose 3.0% to NZ$2.40 and Contact Energy was up 1.5% at NZ$4.66.