Asia stocks lower as Italy borrowing costs rise

BANGKOK — Asian stock markets fell Wednesday as Europe’s festering debt crisis overshadowed figures showing that Americans increased their retail spending for a fifth straight month.

Benchmark oil prices fell below $99 per barrel while the dollar rose against the euro and was steady against the yen.

Japan’s Nikkei 225 index lost 0.6 percent to 8,491.31. Hong Kong’s Hang Seng slid 1.9 percent to 18,973.07 and South Korea’s Kospi shed 0.7 percent to 1,873.28. Benchmarks in Singapore, Taiwan, Australia and mainland China also fell.

Stocks in Asia didn’t follow through on the momentum from Wall Street, where a session of big swings ended with modest gains. Data on retail sales showed Americans spending more on autos, electronics and building supplies in October — and at a faster rate than expected. Many saw the result as a sign that the U.S. economy may well avoid another recession as consumer spending is the biggest component of the country’s GDP.

Still, investors could not get past the mammoth debt loads carried by Greece and Italy, which are threatening to trigger an all-out financial crisis on the continent.

“The world does not believe the crisis is solved,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong. “The market is still very jittery and still worried about possible effect of economic slowdown and recession in Europe. I think this will depress the market for a quite a long period.”

And the problem isn’t just isolated to Greece or Italy, he said.

“It’s the problem of the entire Western world,” Lun said. “For Europe, it overborrowed for 12 years and for the U.S., it probably overspent for 30 years — so 30 years of mismanagement cannot be corrected in one day.”

On Tuesday, higher interest rates on government debt issued by Italy, Spain and other countries rattled European stock markets. The interest rate on Italy’s 10-year bond jumped back above 7 percent, a dangerously high level.

Higher borrowing costs — in the form of extra yields that must be paid for bonds regarded as riskier — are a sign that investors are worried that those countries may have trouble paying their debts.

The debt crisis among the 17 nations that use the euro currency “appears to be deteriorating by the day,” analysts at Credit Agricole CIB said in a report. “Contagion has spread across eurozone bond markets like wildfire and the lack of action to create a firewall means that that there is little to extinguish it.”

Italy’s borrowing rate first crossed the 7 percent threshold last week, raising worries about Rome’s ability to manage its debts. Greece, Ireland and Portugal had to get rescued by international lenders when their borrowing rates crossed the same level.

Meanwhile, Chinese property shares were sharply lower amid falling housing prices as government efforts to cool the overheated housing industry take effect. Hong Kong-listed blue chip companies China Vanke lost 5.1 percent and China Overseas Land &Investment fell 4 percent.

Japan’s Nisshin Steel rose 2.8 percent after announcing intentions to integrate operations with Nippon Metal Industry by October 2012, Kyodo News Agency said. Olympus soared 9.2 percent amid easing worries that the company — embroiled in a scandal over the concealment of huge investment losses — will be delisted by the Tokyo Stock Exchange.

Shares of Tiger Airways jumped 5.3 percent in Singapore trade after the carrier was cleared to increase its number of flights in Australia ahead of the busy Christmas travel period.

On Wall Street, the Dow rose 0.1 percent to 12,096.16. The S&P 500 gained 0.5 percent to 1,257.81, and the Nasdaq added 1.1 percent to 2,686.20.

Benchmark crude for December delivery was down 74 cents at $98.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.23 to settle at $99.37 in New York on Tuesday.

The euro fell to $1.3454 from $1.3543 late Tuesday in New York. The dollar was little changed at 77.04 yen.

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