Europe debt fears hit Asia stocks

2010-02-05 06:49:54

Asian shares have fallen heavily as concerns about government debt levels in some European countries continue to hit global stock markets.

Japan's Nikkei index slumped almost 3%, while stock markets in Hong Kong, Korea and China all fell sharply.

On Thursday, the leading US Dow Jones index dropped 2.6%, while key European markets lost more than 2%.

Debt concerns in Europe were sparked by a lack of demand for government bonds in Portugal.

This reignited fears that countries such as Portugal and Greece would struggle to fund their national deficits.

In the US, worse-than-expected weekly levels of unemployment benefit claims also heightened concerns about the strength of the global economic recovery.

Euro sell-off

"What we're seeing is a wave of panic selling," said Francis Lun at Fulbright Securities in Hong Kong.

"It's a reaction to crashing European and US markets."

The Nikkei fell 298.9 points to 10,057.1, its lowest level since early December.

In Hong Kong, the Hang Seng fell 3.1%, while China's Shanghai Composite index lost 2.4%.

European debt fears also hit the euro, which slid a further 4 cents, or 0.3%, against the dollar to $1.3715 after falling more than 1.5 cents on Thursday.

"It's very bad sentiment for the euro, it's a sell-off for the euro definitely," said Lee Sue Ann at United Overseas Bank at Singapore.