Asia stocks drop on Europe woes, Japan factory data; Nikkei down 1.80%

Investing.com - Asian stocks fell on Thursday on intensifying fears the European debt crisis is spreading from Greece to the larger Spain and will threaten growth in Europe, a key Asian export market.

Weak Japanese factory data pressured Asian stocks down as well.

During Asian trading on Thursday, Hong Kong's Hang Seng Index was down 1.32%, Australia's S&P/ASX200 was down 1.04%, while Japan’s Nikkei 225 Index was down 1.80%.

European unease continued to pound Asia stock bourses.

In Europe, Spain appeared set to recapitalize the Bankia financial institution with EUR19 billion via debt financing, which has currency markets concerned, especially since the regional government of Catalonia has asked Madrid for help refinancing its debts.

Yields in Spanish debt auctions have spiked in recent sessions and remain elevated, while borrowing costs in Italian auctions were up as well.

Meanwhile in Greece, new polls showed the leftwing Syriza political party is gaining ground ahead of June 17 elections.

Syriza politicians oppose austerity measures attached to bailout funding, and a strong showing in the upcoming elections could lead to a coalition government rejecting austerity, which could potentially open the door to a Greek exit from the eurozone.

Europe represents a large trading and financial partner to Asia, and fears are growing that debt crises in southern European countries could drag on growth and demand in healthier countries.

Meanwhile in the U.S., the National Association of Realtors reported that pending home sales dropped 5.5% in April, well beyond expectations for a 0.1% decline.

In Japan, industrial output in April rose 0.2%, less than market forecasts for a 0.5% reading.

In Hong Kong, top decliners included China Unicom, down 5.38%, Li & Fung, down 5.09%, and China Shenhua, down 4.82%.

In Australia, top decliners included National Australia Bank, down 6.13%, Aquarius Platinum, down 5.43%, and Alacer Gold Corp., down 4.49%.

European stock futures indicated a lower opening.

France's CAC 40 futures pointed to a loss of 0.02%, while Germany's DAX 30 futures also signaled a loss of 0.02%. Meanwhile, in the U.K., the FTSE 100 futures indicated a loss of 0.04%.

Dow Jones Industrial Average futures were down 0.07% while the S&P 500 futures were down 0.10%.

Later Thursday in the U.S., the ADP National Employment Report will be released, shedding light on private-sector unemployment rates in the U.S. and serve as a precursor to Friday's official May jobs report.

U.S. gross domestic product data will publish, as will weekly initial jobless claims.
Japan will release data on housing starts.