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HONG KONG: Asian markets were hit by renewed eurozone fears Thursday after a weak Spanish auction raised the prospect that it could be the next country to be hammered by a debt crisis.
The news out of Madrid, as well as another batch of poor data from the region, compounded downbeat sentiment after the US Federal Reserve indicated it would not provide any new stimulus to the economy in the near term.
Tokyo fell 0.94 percent by the break, Hong Kong slipped 1.47 percent, Sydney shed 0.76 percent and Seoul was 0.62 percent lower while Shanghai, in its first session after a three-day break, was flat.
Manila and Mumbai are closed for public holidays.
Spain's borrowing soared Wednesday in its first debt auction since an austerity budget last week, fuelling concern among traders of a rerun of Greece's strife last year when it narrowly avoided a messy default.
Madrid is racing to slash its public deficit to reassure markets that it will not follow Greece -- as well as Ireland and Portugal in needing a bail-out -- after it missed its 6.0 percent public deficit target last year.
Adding to the country's problems is the fact it is heading back into recession, while unemployment rate is tipped to hit 24.3 percent, according to government estimates.
And on Tuesday Budget Minister Cristobal Montoro warned that national debt will jump sharply to 79.8 percent of GDP this year from 68.5 percent last year.
“The rising cost of Spanish debt re-ignited fears in Europe as investors sold off equity investments,” Miguel Audencial, sales trader at CMC Markets, said in a note.
“Lower-than-expected European retail sales figures and German factory orders both confirmed that a full recovery is still far from reach,” Audencial said, according to Dow Jones Newswires.
Also Wednesday a study showed eurozone private sector activity retreated last month, adding to evidence that the region is in recession.
The composite Purchasing Managers Index (PMI) compiled by Markit research firm hit a three-month low 49.1 points from 49.3 in February. A score below the neutral 50-point mark indicates contraction.
The news added to market gloom after minutes from the Fed's most recent policy setting meeting showed it will play a wait-and-see game before further easing monetary policy, meaning there will be less liquidity.
“Apprehensions on the future state of the US economy in a world without quantitative easing overshadowed the slightly higher than expected ADP employment data,” Audencial added.
Payrolls firm ADP said Wednesday that while fewer jobs than expected were created in the private sector in March, figures for prior months were revised upwards.
Employment increased by a seasonally adjusted 209,000 last month, down from a revised 230,000 in February, and lower than forecasts of 217,000 net new positions. However, estimated gains for February rose 14,000, and for January by 9,000.
The figures come ahead of Friday's key government numbers, which include the public sector, and unemployment.
On currency markets the euro bought $1.3154 and 108.12 yen in early Asian trade, compared with $1.3141 and 108.35 yen in New York late Wednesday. The dollar was also at 82.20 yen, compared with 82.46 yen.
Oil prices bounced back from heavy losses late Wednesday in New York where dealers staged a sell-off after the government reported a big jump in stockpiles.
New York's main contract, West Texas Intermediate crude for delivery in May, gained 53 cents to $102.00 per barrel after losing 2.5 percent on Wednesday.
Brent North Sea crude for May was up 30 cents at $122.64 after it shed two percent in New York.
Gold was at $1,624.33 an ounce at 0300 GMT, compared with $1,633.75 late Wednesday.
