Asian markets slip on US losses, Europe woes

HONG KONG - Asian markets fell on Thursday as dealers followed losses on Wall Street while selling pressure was also stoked by fears over Spain and nervousness ahead of crucial Greek polls at the weekend.

Tokyo fell 0.69 per cent, Hong Kong lost 0.74 per cent, Sydney eased 0.86 per cent, Shanghai gave up 0.51 per cent and Seoul was 0.14 per cent lower.

With the eurozone's $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. On Wednesday 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 bonds yields - the rate of return earned by investors - spiked to 6.834 per cent on Tuesday, the highest since the eurozone was founded, and was still sitting at 6.712 Thursday. Anything above 6.0 per cent 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 $1.2560 in early trade, slightly up from $1.2556 in New York late Wednesday. The common currency was fetching 99.76 yen against 99.78 yen.

The dollar was at 79.42 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 per cent, the S&P 500 lost 0.70 per cent and the Nasdaq slipped 0.86 per cent.

Traders went into selling mode after May retail sales fell 0.2 per cent from April, and excluding autos shed a heftier 0.4 per cent, the Commerce Department reported.

New York's main contract, light sweet crude for delivery in July, was down 14 cents to $82.48 a barrel and Brent North Sea crude for July delivery shed 23 cents to $96.90.

Gold was worth $1,617.80 an ounce at 0220 GMT, compared with $1,609.60 late Wednesday.