Asian stocks decline on Italian debt concern as yield surges

Asian stocks fell after a report showed Japan’s machinery orders declined and as a surge in Italy’s bond yields stoked concern the debt-stricken nation may need to seek a bailout.

Commonwealth Bank of Australia (CBA), the nation’s largest lender by market value, dropped 2.9 percent in Sydney on speculation bank earnings will be hurt if Europe fails to contain the sovereign-debt crisis.BHP Billiton Ltd. (BHP), the world’s biggest mining company and Australia’s No. 1 oil producer, declined 3.1 percent after oil and copper futures fell. Fanuc Corp. (6954), a maker of industrial robots, slumped 3.6 percent in Tokyo.

“The big concern is that Italy will need to get its funding from other sources than the market, but because of its size, people are very worried,” said Stephen Halmarick, Sydney- based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The outcome of all this is the European economy will go into recession. That’s a big negative.”

The MSCI Asia Pacific Index fell 1.7 percent to 117.99 as of 9:17 a.m. in Tokyo, with about 30 stocks falling for each that rose on the gauge. The measure sank 3.6 percent last week after Greece announced plans to hold a referendum on Europe’s rescue package. The sovereign-debt crisis has stirred political turmoil across the region, with Italian Prime Minister Silvio Berlusconi offering to resign just days after Greek Prime Minister George Papandreou agreed to step aside.

Japan’s Nikkei 225 (NKY) Stock Average declined 2.3 percent. Australia’s S&P/ASX 200 dropped 3 percent.

(source: Bloomberg)

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