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Asian stock markets shaky as Europe debt woes brew

Pamela Sampson, AP Business Writer

BANGKOK (AP) -- Asian stock markets vacillated between gains and losses Tuesday as signs of a recovering U.S. economy were offset by fears that Spain might need an expensive financial bailout.

Benchmark oil hovered below $103 per barrel. The dollar rose against the euro but weakened against the yen. The greenback also slipped against China's yuan after Beijing on the weekend announced a slightly wider daily trading band for its tightly controlled currency.

For stock markets, a strong retail sales report in the U.S. was not enough to counteract fears that the debt crisis enveloping Europe's smaller economies might morph into something even bigger.

The yield on Spain's benchmark 10-year government bond jumped above 6 percent Monday for the first time since November. Greece, Ireland and Portugal had to seek bailouts after their borrowing costs rose above 7 percent, and traders are becoming concerned that Spain might be next. Spain has the fourth-largest economy among the 17 nations that use the euro and is widely considered too expensive to rescue.

"I think right now, market sentiment overall is still cautious because the focus is still on what is happening in Spain," said Linus Yip, strategist at First Shanghai Securities in Hong Kong.

Japan's Nikkei 225 index rose 0.1 percent to 9,480.42, giving up some morning gains as the yen strengthened against the dollar. A strong yen cuts into the profits of companies operating overseas and has been blamed for sapping vitality from the country's vital export sector.

South Korea's Kospi index slipped 0.4 percent to 1,984.98 and Hong Kong's Hang Seng lost 0.6 percent to 20,490.98.

Australia's S&P/ASX 200 ceded earlier gains and fell 0.2 percent to 4,295.80. Benchmarks in mainland China, Singapore and Taiwan fell while Indonesia, New Zealand and the Philippines rose.

In the U.S., the Commerce Department said that retail sales grew a stronger-than-expected 0.8 percent in March from the previous month.

But the report didn't dispel worries about the economy. The Dow Jones industrial average rose 0.6 percent to 12,921.41. The Standard & Poor's 500 fell marginally to 1,369.57 and the Nasdaq composite index fell 0.8 percent to 2,988.40.

Toshiba Tec Corp., a subsidiary of Japanese consumer tech giant Toshiba Corp., soared 7.5 percent amid reports that it would acquire IBM's point-of-sale terminals business, Kyodo News agency said.

But other Japanese manufactures fell, hurt by the stronger yen. Mazda Motor Corp. sank 3 percent while Yamaha Motor Co. lost 2 percent. Video gaming giant Sony Corp., which recently announced 10,000 job cuts globally, fell 2.6 percent.

Scaled-back growth expectations for China contributed to slumping construction-related shares. Hong Kong-listed China National Building Material Co. tumbled 5.1 percent and Anhui Conch Cement Co. lost 2.3 percent.

Meanwhile, the dollar was slightly weaker at 6.3007 yuan from 6.3150 a day before.

China's central bank on Saturday announced its would allow its currency to fluctuate by a slightly wider margin. The yuan, also known as the renminbi, can now rise and fall by up to 1 percent in value against the dollar on a daily basis, up from 0.5 percent previously.

The move appeared intended to appease complaints by the U.S. and other governments that say an undervalued yuan gives China's exporters an unfair price advantage. China maintains the yuan has already gained 30 percent in value in real terms since 2005.

In other currency trading, the euro fell to $1.3116 from $1.3134 late Monday in New York. The dollar fell to 80.41 yen from 80.49 yen.

Benchmark oil for May delivery was down 2 cents to $102.91 per barrel in electronic trading on the New York Mercantile exchange. The contract rose 10 cents to finish at $102.93 per barrel on the Nymex on Monday.


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