Asian markets hit by fresh Europe fears

Hong Kong — Asian markets mostly fell further on Wednesday following heavy losses in Europe and the United States on fresh eurozone debt worries and concerns over the global recovery.

Traders headed back to the safety of the yen, which weighed on Japanese stocks, while oil prices also came under pressure owing to an expected fall in demand.

Tokyo slipped 0.97 percent by the break — their seventh straight session in the red — while Hong Kong was 1.35 percent lower, Sydney lost 0.72 percent and Shanghai gave up 0.25 percent.

Seoul and Kuala Lumpur were closed for public holidays.

Europe’s debt woes returned as Spanish benchmark 10-year bond yields spiked at 5.94 percent — their highest levels since December — after the government unveiled further swingeing cuts on top of last month’s stiff austerity budget.

Markets have become worried that the severity of the cuts could fuel a recession, in turn hitting the country’s ability to repay its debts.

“Obviously when the European debt crisis comes back into focus it is never a good sign for equity markets,” said Sydney-based Ben Le Brun, market analyst at OptionsXpress in a note, according to Dow Jones Newswires.

Global markets were hit by the scare. On Wall Street the Dow saw its biggest drop of the year, shedding 1.65 percent, the S&P 500 dropped 1.71 percent and the tech-rich Nasdaq fell 1.83 percent.

And in Europe London’s FTSE 100 tumbled 2.24 percent the Frankfurt DAX30 lost 2.49 percent and in Paris the CAC 40 fell 3.08 percent.

In Milan the FTSE Mib index slumped 4.98 percent while Madrid skidded 2.96 percent.

The yen benefited from the nervousness. The dollar slipped to 80.71 yen in Wednesday Tokyo trade, from 81.49 yen in New York Tuesday.

And the euro also softened to $1.3074 in Tokyo from $1.3084 in New York, but firmed to 105.55 yen from 105.49 yen.

It had been at 106.91 yen and $1.3130 in Asia on Tuesday.

Markets were already under pressure amid fears over the global economy after US jobs growth in March came in below forecasts and much lower than previous months, while China has released a string of results pointing to a slowdown.

Demand fears outweighed tensions in the Middle East between the West and Iran. New York’s main contract, West Texas Intermediate crude for delivery in May was down 13 cents at $100.89 per barrel while Brent North Sea crude for May shed 11 cents to $119.77.

Gold was at $1,655.30 an ounce at 0230 GMT, compared with $1,643.60 late Tuesday.