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Asia stocks are mixed after Monday's sell-off in Europe European markets rise in early trading
(about 1 hour later)
Asian stocks were mixed, after European markets tumbled on Monday amid renewed fears about the region's debt crisis. European shares have risen slightly in early trading, as another day of volatile trading is expected due to continuing concerns about the high levels of eurozone debt.
Japan's Nikkei 225 index fell 2%, Hong Kong's Hang Seng shed 1.4%, while South Korea's Kospi was little changed. The FTSE 100 was up 0.5%, while France's Cac had added 0.4% and Germany's Dax rose 0.7%.
On Monday, European markets saw a sell-off that pushed the region's main indexes some 4% lower. Shares had earlier also fallen in Asia, with Japan's Nikkei 225 index up 2%.
Analysts expect market volatility to continue as policymakers try to find a solution to the debt problem.Analysts expect market volatility to continue as policymakers try to find a solution to the debt problem.
"The trend of foreign investors flocking to safe-haven assets, and out of equities, will continue to be today's theme," said Kazuhiro Takahashi from Daiwa Securities. 'European disease'
Banking concerns A core concern over the high levels of government debt in the eurozone is how it will affect the banking sector.
Financial stocks declined in early trade, taking their lead from Europe where fears are building over the state of banks and their balance sheets. Greece is continuing with plans to ask banks and other private holders of its government bonds to swap them for others that pay a lower rate of interest over a longer period.
Commonwealth Bank of Australia lost 0.5%, and National Australia Bank, the country's third-largest lender by market value, fell 1.9%. Japan's Mitsubishi UFJ fell 1.8% in Tokyo. The fear is that other nations, such as Spain and Italy, may ultimately be forced to follow the Greek lead.
Fears over the state of European banks have come sharply back into focus after one of the region's best-known executives warned that a number of lenders were at risk of going bust. On Monday, Deutsche Bank's outgoing chief executive, Josef Ackermann, said on Monday that some European banks would go bust if they were forced to recognise in their accounts the existing losses on government debts they own, based on current market prices for government bonds.
Deutsche Bank's outgoing chief executive, Josef Ackermann, said on Monday that some European banks would go bust if they were forced to recognise in their accounts the existing losses on government debts they own, based on current market prices for government bonds. Banking stocks were among the early fallers, with Commerzbank 2.5% lower, Credit Agricole down 1.1% and Barclays losing 0.8%.
Continuing worries However, other banks saw their shares rise, with Deutsche Bank adding 1.4%.
Analysts are also worried that the European debt problems will now engulf Italy, one of the continent's biggest and most interlinked economies.
Italy is in the process of trying to implement an austerity package that is needed to put its finances in order, despite rolling back on a number of its key pledges.
Analysts said uncertainty about developments in some of Europe's biggest economies was denting market sentiment.
"It's the European disease that is infecting markets all around the world at the moment," said Michael Heffernan of Austock Group."It's the European disease that is infecting markets all around the world at the moment," said Michael Heffernan of Austock Group.
At the same time, fears about the US, the world's biggest economy, slipping into a recession have been gathering pace. Economy fears
Data out last week showed that no new jobs were added to the US economy in August. To make matters worse, the White House warned that the unemployment rate in the US is likely to stay around 9% till the end of 2012. Concerns are also growing over the state of both the European and US economies.
"The market will continue to tread water this week until we get more details from US President Barack Obama to stabilise labour sector." said Kim Byung-youn of Woori Investment & Securities. Data on Monday by research group Markit showed that service sector activity in the UK almost stagnated in August, while business confidence in the eurozone fell at its fastest rate last month since the 2008 collapse of Lehman Brothers.
Revised eurozone economic growth data is due out later.
In the US, fears have been gathering pace that the world's biggest economy could slip into a recession.
Data out last week showed that no new jobs were added to the US economy in August. To make matters worse, the White House warned that the unemployment rate in the US was likely to stay at about 9% till the end of 2012.
"The market will continue to tread water this week until we get more details from US President Barack Obama to stabilise [the] labour sector," said Kim Byung-youn of Woori Investment & Securities.
President Obama is scheduled to deliver a key speech on 8 September to outline his much-anticipated jobs creation plan.President Obama is scheduled to deliver a key speech on 8 September to outline his much-anticipated jobs creation plan.
Broader falls
European markets saw one of the year's biggest sell-offs on Monday.
Frankfurt's Dax index ended the day 5.3% lower, with the Paris Cac 40 4.7% lower and the FTSE 100 down 3.6%, posting its second-biggest fall this year.
Wall Street and US markets were closed on Monday for a public holiday. However, US stock futures fell more than 2% on Monday in electronic trading.
The declines in stock markets saw investors turn to less riskier assets.
Gold, which is considered a safe-haven investment in times of economic uncertainty, was just short of $1,900 an ounce, close to its to record high.
Japanese government bonds, another relatively safer investment, also gained.