Asian shares ended sharply lower Thursday after falls in overseas markets as investors took fright over rising Italian borrowing costs that raised fresh worries over the European crisis, while Prime Minister Silvio Berlusconi’s insistence on elections instead of a transitional government threatened prolonged instability in the region.
The Nikkei ended down 2.9%. The Shanghai Composite fell 1.8% while the Hang Seng led declines for the region, plunging 5.2%. The S&P/ASX All Ordinaries fell 2.2% while the Sensex was closed for a religious holiday.
Bond yields on the Italian 10-year note rose over 7%, leaving the country on the verge of needing a bailout that Europe can ill afford at the moment.
Berlusconi confirmed he would resign after implementing economic reforms demanded by the European Union but said Italy must hold elections, likely in February, and opposed any form of interim government.
Talks also collapsed in Greece over the formation of a new government.
Stocks on the Move
Shares of scandal-hit Olympus remained untraded in Tokyo after being overwhelmed by sell orders.
Japan’s biggest lenders were sharply lower in tandem with their overseas counterparts. Mitsubishi UFJ Financial erased 2.7% while Sumitomo Mitsui and Mizuho gave up 4.7% and 3.8% each, respectively.
Nomura dropped 3.1% while smaller rival Daiwa fell 3.5%.
Japanese economic data earlier today also painted a disappointing picture with core machinery orders, seen as a leading indicator of capital spending, falling 8.2% in September. The result fell short of economists' expectations.
Weakness in commodities impacted trading houses and Mitsui & Co. fell 5.5% while Marubeni Corp. fell 6.2%. Energy major Inpex slipped 6.2% while Japan Petroleum Exploration Co. was down 4.8%.
Major exporters lost ground with index heavyweight Sony dropping 4.7% while Panasonic and Sharp Corp. gave up 3.6% and 3.1% each, respectively. Elpida Memory tumbled 10%.
Auto stocks also reversed gears and were mostly down between 2% and 3.5%.
In Hong Kong, financials were among the major losers with index heavyweights HSBC and ICBC erasing 9.2% and 8.5% each, respectively.
Bank of China and China Construction Bank were down 6% and 5.6% each, respectively while AgBank and Bank of Communications gave up 6.8% and 7.6% each.
Esprit Holdings declined 7.5% while Li & Fung gave up 5.6%.
Property stocks were also notable decliners with China Resources Land down 6.7% and Agile Property Holdings losing as much as 8.1%.
Aussies shares were under pressure from the ongoing European debt crisis despite slightly better-than-expected unemployment figures that showed Australia's unemployment rate falling to 5.2% in October.
In local news, Insurance Australia Group fell 4.4% after it estimated claims from floods in Thailand will cost at least $50 million.
Property group Westfield Group was down 2.2% after it sold its 75% stake in the Broadmarsh shopping centre in Nottingham in the United Kingdom for $A86.86 million.
Index leader BHP Billiton traded down 2.2% while fellow miner Rio Tinto sank 2.6%. Fortescue Metals plunged 8%.
Energy companies were on slippery ground with Woodside Petroleum down 2.6% and Santos 1.9% lower. Oil Search lost 3.5%.
