Asian stock markets are trading lower on Monday on renewed worries about the debt situation in Spain after the country's borrowing costs climbed to a euro-era high.
The Spanish region of Valencia on Friday asked for financial assistance from that country's central government, pushing the Spanish government bond yields above the crucial 7 percent mark. Spain's 10-year government bonds topped 7.3 percent at one point, hitting a record high since the introduction of the euro in 1999.
Eurozone finance ministers on Friday gave final and unanimous approval for a 100 billion euro bailout deal for the recapitalization of troubled Spanish banks. Of this, Euro 30 billion will be set aside for use in case of urgent unexpected financing needs, the Eurogroup said.
In addition, the Spanish government cut its economic forecast on Friday and sees the recession extending into next year as it adopts more austerity measures. The government now expects the economy to shrink 0.5 percent in 2013, in contrast to its earlier forecast for a growth of 0.2 percent. The economy is expected contract 1.5 percent this year, slightly less than the 1.7 percent decline predicted earlier.
The Japanese market is trading lower by more than a percent on renewed worries about the Eurozone debt crisis following news of a request for financial aid by an indebted region of Spain.
The Spanish region of Valencia on Friday asked for financial assistance from that country's central government, pushing the Spanish government bond yields above the crucial 7 percent mark.
In late morning trades, the benchmark Nikkei 225 Index is losing 125.15 points or 1.44 percent to 8,544.72.
Among financials, Mitsubishi UFJ Financial is declining almost 2 percent, Daiwa Securities Group is down 1.5 percent and Resona Holdings is trading lower by 1.28 percent.
Exporter stocks are trading lower after the euro dropped to the 95-yen level. Pioneer Corp. is down almost 6 percent, Panasonic Corp. is declining more than 3 percent and Sharp Corp. is losing almost 4 percent.
All Nippon Airways fell for a fourth straight session on Monday. The stock is currently down 2.70 percent.
On the economic front, Japan will announce June figures for supermarket sales; they were down 1.7 percent on year in May. Also, Japan's Cabinet Office will release its monthly economic report.
In the currency market, the U.S. dollar is trading in the lower 78-yen range on Monday. In early trades, the dollar is trading in a range of 78.38-78.42 yen, down 0.21 yen from Friday's close of 78.59-78.61 yen in Tokyo.
The Australian market opened lower on Monday, tracking the negative cues from Wall Street on Friday due to ongoing concerns about the debt situation in Spain.
In early morning trades, the benchmark S&P/ASX 200 Index was down 37.90 points or 0.90 percent to 4,161.20 while the broader All Ordinaries Index declined 39.20 points or 0.93 percent to 4,191.40.
Among the mining stocks, BHP Billiton is down more than 2 percent, Rio Tinto is losing almost 2 percent and Newcrest Mining is trading lower by 2.70 percent.
In the banking sector, ANZ Bank is losing 0.74 percent, Commonwealth Bank is down 0.33 percent, Westpac is declining 0.85 percent and National Australia Bank is trading lower by 0.79 percent.
Leighton Holding's mining services arm Thiess has won a A$2.3 billion contract to extend operations at Jellinbah Group's Lake Vermont coal mine in Queensland's Bowen Basin.
The six-year deal will double output to 8 million tonnes from the current 4 million tonnes a year and will also continue Thiess' responsibility at Lake Vermont for mine operations and maintenance. However, Leighton's stock is down almost 2 percent.
Goodman Fielder said its full-year normalized earnings before interest and tax or EBIT are likely to be at the lower end of its forecast range of A$230 million to A$245 million. The company also said it will incur a charge of about A$200 million for the year in relation to the valuation of some of its businesses. The stock is trading lower by more than 4 percent.
On the economic front, Australia's producer prices increased more than expected in the June quarter, data released by the Australian Bureau of Statistics showed Monday.
The producer price index rose 0.5 percent quarter-on-quarter, faster than expectations for a 0.3 percent rise. On an annual basis, the index was up 1.1 percent. This was forecast to increase 1 percent.
In the currency market, the Australian dollar is trading lower against the U.S. dollar amid concerns about the euro zone crisis. In early trades on Monday, the local unit was trading at US$1.0360, compared to US$1.0409 at close on Friday.
Among other Asian markets open for trading, Hong Kong, Seoul and Taiwan are trading lower by than more than 2 percent each, Shanghai and Indonesia are down by more than 1 percent each, and Singapore and Malaysia are trading marginally lower.
On Wall Street, stocks lost ground on Friday, hurt by worries about Europe and lingering concerns about the global economy. With the slide, Wall Street surrendered some of the gains posted earlier in the week.
The Dow Jones Industrial Average fell 120.79 points, or 0.9 percent, to close at 12,822.57. The Nasdaq slipped 40.60 points, or 1.4 percent, to end at 2,925.30. The S&P 500 dropped 13.85 points, or 1 percent, to finish at 1,362.66.
The major European markets also fell on Friday as the DAX of Germany fell by 1.90 percent and the CAC 40 of France decreased by 2.14 percent, while the FTSE 100 of the U.K. dropped by 1.06 percent and the SMI of Switzerland finished down by 0.61 percent.
U.S. crude oil ended lower on Friday, snapping a seven-day winning streak, mostly on concerns over the eurozone with borrowing costs in Spain soaring above the crucial 7 percent mark.
While the Middle East oil supply worries eased, prices were impacted by declining U.S. equity markets and the dollar strengthening against a basket of major currencies. Nonetheless, oil gained almost 5 percent on the week.
Crude for August delivery shed $1.22 or 1.3 percent to close at $91.44 a barrel on the New York Mercantile.
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