Asian markets slip amid new Europe fears

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Renewed fears over Europe's sovereign debt crisis continued to dampen sentiment in Asia Tuesday as investors were given an anaemic lead from Wall Street after a mixed bag of US data.

Tokyo was flat, edging down 5.93 points to 9,464.71, with TDK down 0.36 percent to close at 4,150 yen and Sony down 2.30 percent at 1,397 yen.

Toshiba ended unchanged at 333 yen following a report in the Nikkei business daily that its subsidiary Toshiba Tec Corp. will spend around 70.0 billion yen to buy IBM's point-of-sale terminals business.

Seoul was 0.37 percent lower, slipping 7.33 points to 1,985.30 and Sydney gave up 0.32 percent, or 13.7 points, to close at 4,288.6.

In the afternoon Hong Kong shed 0.72 percent and Shanghai lost 0.33 percent.

Fears that Spain could follow Greece, Ireland and Portugal in needing a bailout sent the cost of the country's debt above six percent for the first time since late last year.

Investors fear that Madrid could slip into a spiral of recession owing to the swingeing cuts it has made to reduce its public deficit.

The yield on Spanish 10-year debt bonds climbed to 6.094 percent on Monday from 5.960 percent at the close of trading on Friday.

The country's borrowing costs are higher than at any time since the European Central Bank introduced its first operation to provide cheap loans to troubled regional banks in December.

"Market focus looks set to remain in Europe. Spanish debt auctions tonight and on Thursday will be closely watched," Mike Jones, currency strategist at Bank of New Zealand said in a note.

"Any evidence of waning demand for Spanish debt would see a heavy toll taken on the euro," he said, according to Dow Jones Newswires.

The eurozone was given a boost on Tuesday morning when Japan pledged to contribute $60 billion to the International Monetary Fund as part of the US-based organisation's bid to increase a firewall against the debt crisis.

The decision comes days before a Group of 20 finance chiefs' meeting in Washington that will likely focus on the issue and follows a eurozone move to temporarily hike its bailout fund to 700 billion euros from 500 billion.

However, the move had little positive impact on Asian equities.

On currency markets in afternoon Asian trade the euro bought $1.3107, compared with $1.3143 late Monday in New York, while it was at 105.38 yen from 105.64 yen.

However the single currency is still up from the lows of $1.2995 in Europe and 104.85 yen in Asia Monday.

The dollar was trading at 80.40 yen, compared with 80.39 yen late Monday in New York.

Statistics from the United States were inconclusive as to whether the world's biggest economy was improving.

The Commerce Department reported overall retail and food service sales expanded by 0.8 percent last month, slightly below February's increase but better than analysts expected.

But the New York state manufacturing index plunged to 6.6 in April, from 20.2 in March, and a homebuilders' sentiment index fell more than expected.

Financials were lifted, however, after Citigroup reported a better-than-forecast $2.9 billion profit for the first quarter of the year.

The Dow Jones Industrial Average rose 0.56 percent, the S&P 500 inched down 0.05 percent and the Nasdaq was off 0.76 percent.

Crude prices were mixed. New York's main contract, West Texas Intermediate (WTI) crude for delivery in May was up one cent at $102.94 per barrel while Brent North Sea crude for June shed 47 cents to $118.21 in the afternoon.

Gold was at $1,648.30 an ounce at 0600 GMT, compared with $1,650.11 late Tuesday.

In other markets:

-- Taipei fell 1.86 percent, or 143.99 points, to 7,585.87.

Hon Hai Precision fell 3.93 percent to Tw$110.0 while TSMC was 1.3 percent lower at Tw$83.8.

-- Wellington ended 0.20 percent, or 7.04 points, higher at 3,480.54.

Contact Energy was 0.4 percent higher at NZ$4.77, Telecom was down 1.8 percent at NZ$2.485 and Fletcher Building was up 0.8 percent at NZ$6.26.

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