Asian Markets, Euro Slip as Europe Fears Weigh

Asian markets mostly fell on Thursday and the euro slipped as concerns over the Eurozone debt crisis refused to abate, ahead of an auction of long-term Italian debt later in the day.

With trading light due to the Christmas holidays, Asia also had little cue for direction from Wall Street and Europe despite Rome enjoying a successful sale of short-term bonds on Wednesday.

Tokyo shed 0.29 percent, or 24.73 points, to end at 8,398.89 while Sydney fell 0.43 percent, or 17.7 points, to 4,071.1.

Hong Kong fell 0.65 percent, or 120.75 points, to 18,397.92.

Seoul was flat, edging up 0.62 points to 1,825.74 on the market's last trading day of the year, while Shanghai staged an afternoon spurt to end 0.16 percent, or 3.55 points, up at 2,173.56.

Japanese exporters were hurt as the yen surged to its highest level against the euro since June 2001, with dealers also nervous ahead of the Italian bond sale.

In Asian trade the European currency fell to 100.35 yen, compared with 100.80 in New York late Wednesday, while it also hit an 11-month low against the dollar of $1.2888 compared with $1.2912 in New York.

However, it bounced back slightly in late afternoon to sit at $1.2923 and 100.44 yen.

The dollar stood at 77.70 yen, from 77.90 in New York.

Markets took scant relief from Italy's auction Wednesday of 9.0 billion euros ($11.8 billion) in six-month bonds at low rates, with broader Eurozone worries still dominating trade.

The average rate on the debt for Rome was 3.25 percent, half the 6.50 percent paid in a similar sale in November, when worries that Italian finances might collapse filled the markets.

"The short end (Italian debt auction) obviously went better than expected, but the big test for markets tonight (Thursday) will be how the long end goes," Sydney-based Macquarie Private Wealth division director Martin Lakos said.

"Trading is going to remain thin and volatile," he told Dow Jones Newswires.

Market-watchers will be keen to see if Italy's 10-year bond sale generates interest rates of more than seven percent -- a level that is seen as unsustainable for governments to service their debt.

News that Eurozone banks deposited a record amount of overnight funds at the European Central Bank on Tuesday -- breaking the record set the day before -- indicated lingering tensions in the single-currency zone.

Banks put 452.03 billion euros on deposit for 24 hours at the ECB overnight Tuesday, beating the previous record of 411.8 billion euros set Monday.

Rising levels of deposits are seen as a sign of market tension, with heavy use of the facility suggesting banks favour parking the money at low interest rates rather than lending to each other.

The huge amounts indicate banks are hoarding cash after more than 500 of them last week borrowed a record 489.2 billion euros from the ECB in a new three-year lending facility.

European stocks mostly fell in morning trade Thursday with London's FTSE 100 sliding 0.11 percent to 5,501.36 points, the Paris CAC 40 dipping 0.11 percent to 3,067.79 points, while Frankfurt's DAX 30 added 0.20 percent to 5,782.16.

Oil was mixed. New York's main contract, light sweet crude for delivery in February, was up 26 cents at $99.62 a barrel in the afternoon.

Brent North Sea crude for February delivery was up 32 cents to $107.88.

Gold stood at $1,549.22 an ounce at 1000 GMT, compared with $1,588.26 late Wednesday.

In other markets:

-- Singapore gained 0.24 percent, or 6.53 points, to 2,672.78.

United Overseas Bank gained 0.65 percent to Sg$15.54 and Neptune Orient Lines gained 0.88 percent to Sg$1.15

-- Taipei edged up 0.26 percent, or 18.15 points, to end at 7,074.82.

Hon Hai rose 0.48 percent to Tw$82.9 while Taiwan Semiconductor Manufacturing Co was 0.13 percent higher at Tw$75.8.

-- Manila, which is closed Friday for a public holiday, ended 0.81 percent higher, adding 35.33 points to 4,371.96.

Banco de Oro ended up 0.9 percent at 59 pesos, Philippine Long Distance Telephone rose 1.0 percent to 2,542 pesos and Globe Telephone was up 4.9 percent at 1,133 pesos.

-- Wellington rose 0.29 percent, adding 9.35 points, to end at 3,246.25.

Telecom was flat at NZ$2.05, while Fletcher Building added 1.0 percent to NZ$6.06 and Contact climbed 0.97 percent to NZ$5.22.

-- Jakarta rose 1.05 percent, or 39.56 points, to 3,808.77.

Car maker Astra International rose 1.0 percent to Rp 74,000, Bank Mandiri gained 1.5 percent to Rp 6,700 and cigarette maker Gudang Garam rose 2.8 percent to Rp 61,750.

-- Bangkok lost 0.42 percent, or 4.28 points, to 1,023.91.

Banpu dropped 0.37 percent to 538.00 baht, while PTT closed unchanged at 317.00.

-- Kuala Lumpur added 0.17 percent, or 2.58 points, to close at 1,506.69.

RHB Capital rose 2.4 percent to 7.30 ringgit, Gamuda added 2.1 percent to 3.37 ringitt and CIMB Group Holdings gained 0.9 percent to 7.16 ringgit.