BANGKOK ? Asian stock markets fell Thursday as Japanese business confidence dropped and higher borrowing costs for Italy sparked worries over the ability of European governments to get a grip on their ever-burgeoning debts.
Benchmark oil rose to near $95 per barrel, a day after plummeting more than $5, while the dollar fell against the euro and was steady against the yen.
Japan's Nikkei 225 index shed 1.3 percent to 8,406.99. South Korea's Kospi lost 1.8 percent to 1,823.30 and Hong Kong's Hang Seng tumbled 2 percent to 17,984.25. Australia's S&P/ASX 200 dropped 1.5 percent to 4,126.30. Benchmarks in Singapore, Taiwan, and mainland China were also lower.
In Japan, confidence at major manufacturers fell over the last quarter. The Bank of Japan's "tankan" survey of business sentiment fell to minus 4.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.
Japan's strong yen has hit multiple historic highs this year against the dollar, making business conditions difficult for Japan's export-reliant economy.
Some of the gloom was offset, however, by preliminary manufacturing figures showing that China's manufacturing contracted at a slower rate in December. HSBC's purchasing manager's index for December stood at 49.0, up from 47.7 in November. Any number below 50 indicates a contraction in manufacturing activity.
On Wall Street, stocks plummeted Wednesday amid a growing sense that Europe's leaders have failed to contain that region's debt crisis.
Since European leaders reached an agreement to rein in future government budget deficits last week, investors and credit rating agencies have criticized the deal for failing to address current problems.
Italy had to pay higher borrowing rates in its last bond auction of the year Wednesday. The third-largest economy among the 17 nations the use the euro paid 6.47 percent interest to borrow 3 billion euros ($3.95 billion) for five years, up from 6.3 percent just a month ago.
The higher rates make it more expensive for Italy to borrow money and reflect rising doubts that the country will be able to repay its debts.
Italy is one of a handful of European countries whose debt loads have raised the risk of default ? an event that could have catastrophic consequences for global banking, cause the euro currency to collapse and spark a global recession.
The Dow Jones industrial average fell 1.1 percent to close at 11,823.48 on Wednesday. The Standard & Poor's 500 index fell 1.1 percent to 1,211.82. The Nasdaq fell 1.6 percent to 2,539.31.
Benchmark oil for January delivery was up 1 cents at $94.96 a barrel in electronic trading on the New York Mercantile Exchange. The contract declined $5.19 to finish at $94.95 per barrel on the Nymex.
In currency trading, the euro rose to $1.2986 from $1.2977 late Wednesday in New York. The dollar was nearly unchanged at 78.06 yen from 78.07 yen.
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