Asian stocks lower on borrowing fears in Europe

November 16, 2011 - 11:25 PM

HONG KONG (AP) — Asian stocks were mostly lower on Thursday after a credit ratings agency warning that U.S. banks could be hit hard if Europe's debt crisis spreads beyond financially troubled countries like Greece.

Oil prices fell below $102 per barrel, while the dollar rose against the yen and the euro.

Japan's Nikkei 225 index lost 0.3 percent to 8,436.49 while Hong Kong's Hang Seng dropped 1.2 percent to 18,725.32. South Korea's Kospi was marginally higher at 1,858.26.

Mainland China's benchmark Shanghai Composite Index lost 0.2 percent at 2,459.52. Benchmarks in Singapore and Taiwan also fell, while Australia's S&P ASX 200 edged up 0.2 percent to 4,255.10.

Asian markets felt the pressure as fears in Europe heightened following a rise in the interest rate — or yield — on 10-year Italian government bonds to near 7 percent. That's the level that eventually forced Greece, Ireland and Portugal to seek bailouts.

That was followed by a warning from Fitch Ratings, one of the big three credit rating agencies, that U.S. banks could be "greatly affected" if Europe's debt crisis spreads beyond the affected countries.

The developments on Wednesday drove up fears about the global financial economy.

"Contagion from the eurozone debt crisis is spreading quickly, threatening to turn a regional crisis into a global crisis," strategists at Credit Agricole CIB said in a research note.

In New York on Wednesday, the Dow Jones industrial average closed at 11,905.59, a loss of 1.6 percent, with most of the losses coming after the Fitch report was released.

The Standard & Poor's 500 index fell 1.7 percent to 1,236.92. The Nasdaq composite lost 1.7 percent to 2,639.61.

Benchmark crude for December delivery was down 64 cents at $101.95 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $3.22 to settle at $102.59 in New York on Wednesday.

In currencies, the euro weakened to $1.3464 from $1.3512 late Wednesday in New York. The dollar strengthened to 77.04 yen from 76.94 yen.