Asian stocks fell Tuesday as optimism on the 100 billion euro ($125 billion) aid package for Spanish banks faded, and markets failed to uphold the gains made Monday.
Japan's Nikkei Stock Average fell 1.02 percent, or 88.18 points, to 8,536.72. Among major losers were Panasonic (3.5 percent), Mazda Motors (2 percent) and Canon (0.8 percent). South Korea's KOSPI declined 0.66 percent, or 12.30 points, to 1,854.74.
India's BSE Sensex rose 0.37 percent, or 61.34 points, to 16,729.35 amid hopes that the Reserve Bank of India would announce a cut in the repo rate by 50 basis points. Stocks of banks, auto, oil and gas, metals and capital goods companies rose. Major gainers were State Bank of India (1.8 percent), Larsen & Toubro (1.8 percent) and ICICI Bank (1.1 percent). The rupee gained 17 paise to touch 55.91 against the dollar.
The Chinese Shanghai Composite Index fell 0.70 percent, or 16.06 points, to 2,289.79. Hong Kong's Hang Seng declined 0.43 percent, or 81.07 points, to 18872.56. Major losers were HSBC Holdings Plc (1.16 percent) and Esprit Holdings Ltd (0.89).
Market sentiment turned negative as investors were concerned that the agreement by the euro zone finance ministers to lend the bailout package to the Spanish banks would not be sufficient to take the country completely out of the economic crisis. Investor confidence has been severely affected by the worrisome condition of Spain's banking sector, which has added to the debt crisis looming over the euro zone.
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Though Spain's bailout request for its banks buoyed the markets Monday, it was short-lived as concerns persist among investors, who are closely watching the country's economic situation that is posing a serious threat to its financial stability. The mood of the markets quickly reversed to negative Tuesday as market players feared that Spain's weak economic growth would continue to hamper efforts to bring the budget deficit down.
Nervousness among investors ahead of the June 17 elections in Greece is growing as prospects of a 'Grexit' have by no means dissipated. But Greek political parties are not advocating the scenario of the country exiting the euro zone even if they would like to renegotiate the bailout terms.