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Asian stocks fall as enthusiasm over European bailout for Spanish banks evaporates
BANGKOK (AP) ' Asian stock markets slid Tuesday as enthusiasm for a European plan to rescue Spain's teetering banks turned to skepticism.
An offer by the 17 countries that use the euro to loan Spain up to '100 billion ($125 billion) to revive banks crushed by bad real estate loans was initially met with euphoria, driving markets up Monday.
But concerns have quickly grown that the rescue is a band aid that won't prevent Spain's severe economic problems from getting worse. A further deterioration in Spain's situation would intensify the broader European debt crisis that is dragging on world growth.
Japan's Nikkei 225 index fell 1.3 percent to 8,514.76. South Korea's Kospi lost 1 percent to 1,848.75 and Hong Kong's Hang Seng was 0.9 percent lower at 18,785.84.
Benchmarks in Singapore, Taiwan and mainland China fell. But Australia's S&P/ASX 200 rose 0.3 percent to 4,073.90.
Spain became the fourth European nation to seek a rescue, after Greece, Portugal and Ireland. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Italy's government on Monday confirmed that the country's recession is deepening. The economy contracted at a quarterly rate of 0.8 percent in the first three months of the year, the worst contraction in three years and double Spain's rate.
Adding to market worries was China's economic slowdown. A large steelmaker in China, Baoshan Iron & Steel, said it lowered steel prices as demand from makers of appliances and cars slowed. Shanghai-listed Baoshan fell 1.5 percent.
The news sent other Asian steelmakers lower. Japan's Nippon Steel Corp. sank 2.9 percent and South Korea's POSCO fell 1.9 percent.
Wall Street opened sharply higher Monday but faded throughout the day. The Dow Jones industrial average fell 1.1 percent to 12,411.23. The Standard & Poor's 500 dropped 1.3 percent to 1,308.93. The Nasdaq composite index shed 1.7 percent to 2,809.73.
Benchmark oil for July delivery was down 91 cents to $81.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.40 to finish at $82.70 per barrel in New York on Monday.
Among currencies, the euro fell to $1.2489 from $1.2498 late Monday in New York. The dollar fell to 79.25 yen from 79.44 yen.