Asian markets mixed amid Spain fears

HONG KONG: Asian markets were mixed on Tuesday as attention turned to Spain, where a growing banking and borrowing crisis has raised fears the country could be forced to ask for a bailout.

While concerns that Greece could exit the eurozone remain high, Spain's struggles have come to the fore in the past week after Bankia, one of the country's biggest lenders, asked for $24 billion in state aid.

Tokyo fell 0.27 percent and Hong Kong slipped 0.16 percent, but Seoul added 0.71 percent, Sydney gained 0.26 percent and Shanghai was flat.

In Madrid Prime Minister Mariano Rajoy said Monday the country was struggling to borrow as the yields on benchmark Spanish bonds soared to 6.479 percent, considered too high for governments to keep servicing their debts.

However, he tried to soothe investors by saying that his government would not have to follow Greece, Ireland and Portugal in asking for a bailout to help pay its bills.

"Systemic risk is on the rise, and the problems have increasingly become circular, with banks themselves large holders of government debt," ANZ Research analysts said in a note.

"Spain has become another problem child for the (European Union)," it said, according to Dow Jones Newswires.

Spain's woes come as dealers are also nervously looking at Greece, where voters go to the polls for a second time in six weeks on June 17 in an election seen as likely to decide whether the country stays in the euro or not.

With anti-austerity parties -- who have promised to tear up terms of a bailout package -- performing well on May 6 there had been expectations they would add to their gains next month, sending global markets spinning downwards on fears the country will be forced to leave the currency bloc.

However, weekend opinion polls showed the pro-austerity conservatives in front, fuelling hopes Athens will eventually comply with the bailout terms.

On currency markets the euro bought $1.2525 in Asian trade, against $1.2543 in London, while it was at 99.61 yen compared with 99.95 yen. US markets were closed Monday for a holiday.

The dollar was at 79.52 yen Tuesday, largely unchanged from London.

On oil markets New York's main contract, West Texas Intermediate crude for delivery in July was up 14 cents to $91.00 per barrel while Brent North Sea crude for July shed 19 cents to $106.92.

Gold was at $1,573.60 an ounce at 0225 GMT, compared with $1,578.70 late Monday. (AFP)