Asian markets edge up as Spain, Greece in focus

People walk by an electronic stock board of a securities firm in Tokyo on June 11, 2012. as Japan's Nikkei 225 index jumped 165.64 points and closed at 8,624.90. Asian markets mostly rose Wednesday, June 13, 2012, after a positive lead from Wall Street and Europe but gains were capped by concerns about Spain's banking system and as Greece prepares for another election. AP PHOTO/KOJI SASAHARA

HONG KONG—Asian markets mostly rose Wednesday after a positive lead from Wall Street and Europe but gains were capped by concerns about Spain’s banking system and as Greece prepares for another election.

Adding downward pressure to sentiment was a decision by Fitch to downgrade 18 Spanish banks while the euro was steady against the dollar and yen.

Tokyo closed up 0.60 percent, or 51.12 points, at 8,587.84, while Hong Kong climbed 0.82 percent, or 153.96 points, to 19,026.52 and Shanghai gained 1.27 percent, or 29.13 points, to 2,318.92.

Seoul rose 0.25 percent, or 4.58 points, to close at 1,859.32, but Sydney slipped 0.22 percent, or 9.1 points, to finish at 4,063.8.

The early euphoria over eurozone finance chiefs’ weekend agreement to a bailout for Spain’s banks of up to $125 billion has evaporated amid concerns the government will now need a rescue as its borrowing costs have soared.

Spanish 10-year government bonds yields – the rate of return earned by investors – spiked to a record 6.834 percent, the highest level since the eurozone was founded, before easing slightly.

The 10-year yield on bonds in Italy, another troubled economy, leapt to a high of 6.301 percent from the previous day’s closing level of 6.032 percent.

Meanwhile, Fitch slashed the ratings of 18 Spanish banks, a day after it cut the country’s two biggest lenders, Santander and BBVA.

Fitch, which cut Spain’s sovereign debt rating by three notches last week to “BBB,” said its latest move was the result of the potential for the loan portfolios of certain banks to deteriorate further.

Despite the news, markets in the US and Europe were higher, with repeated calls by the European Central Bank for a common banking union to bolster the region’s financial system providing some reassurance.

Also Chicago Federal Reserve Bank president Charles Evans reiterated his support for more monetary stimulus ahead of next week’s meeting of the Federal Open Market Committee.

On Wall Street the Dow rose 1.31 percent, the S&P 500 gained 1.17 percent and the Nasdaq Composite advanced 1.19 percent.

In Europe stock markets in London, Frankfurt, Paris and Madrid all posted gains and most of the indices extended them in early trade Wednesday.

“Many investors remain on the fence, awaiting the outcome of Greece’s upcoming elections, so risk capital is sparse,” Monex market analyst Toshiyuki Kanayama told Dow Jones Newswires.

Traders fear that Sunday’s general election in Greece, the second in six weeks, could end in a victory for anti-austerity groups who would tear up a bailout agreement in a move that would lead to Athens exiting the eurozone.

The euro bought $1.2533 in early European trade, up from $1.2502 in New York late Tuesday.

Against the Japanese currency, the common European unit moved up to 99.86 yen from 99.44 yen, while the dollar firmed to 79.68 yen from 79.52 yen.

On oil markets New York’s main contract, light sweet crude for delivery in July, eased 24 cents to $83.08 a barrel and Brent North Sea crude for July rose 16 cents to $97.30 a barrel.

Gold was worth $1,609.60 an ounce at 1100 GMT, compared with $1,590.50 late Tuesday.

In other markets:

— Mumbai edged up 0.11 percent, or 17.71 points, to 16,880.51.

India’s largest private company Reliance Industries slipped 0.84 percent to 716.50 rupees while its biggest defence contractor, Larsen & Toubro, was up 2.60 percent at 1,349.75 rupees.

— Taipei closed 0.24 percent, or 16.75 points, higher at 7,088.83.

Smartphone maker HTC rose 1.45 percent to Tw$350.0 while Taiwan Semiconductor Manufacturing Co. ended up 0.76 percent at Tw$80.0.

— Manila closed 0.66 percent, or 33.76 points, up at 5,109.61.

SM Investments gained 0.14 percent to 701 pesos and DMCI Holdings added 0.18 percent to 56 pesos but Philippine Long Distance Telephone dropped 0.65 percent to 2,440 pesos.

— Singapore slipped 0.36 percent, or 10.20 points, to 2,786.88.

Singapore Telecommunications was down 0.32 percent to Sg$3.15 while real estate developer CapitaLand shed 1.83 percent to Sg$2.68.

— Bangkok edged down 0.41 percent, or 4.71 points, to 1,158.22.

Oil giant PTT added 0.31 percent to 326 baht, while energy firm Banpu dropped 1.27 percent to 466 baht.

— Kuala Lumpur ended 0.01 percent, or 0.16 points, higher at 1,576.23.

UMW Holdings gained 1.8 percent to 8.32 ringgit, Telekom Malaysia rose 1.3 percent to 5.53 and IOI Corp. added 0.8 percent to 5.12. YTL Corp shed 1.5 percent to 2.02 ringgit while MMC Corp. fell 1.1 percent to 2.65.

— Jakarta rose 0.2 percent, or 7.88 points, to 3,860.46.

Telkom jumped 3.3 percent to 7,900 rupiah, Bank Mandiri added 0.7 percent to 7,000 rupiah, while coal producer Bumi slid 5.0 percent to 1,130 rupiah.

— Wellington fell 1.28 percent, or 43.87 points, to 3,381.73.

Fletcher Building was off 2.4 percent at NZ$6.13, Telecom was down 2.3 percent at NZ$2.33 and Contact Energy slipped 1.9 percent to NZ$4.62.