Asian shares wobbled on Thursday as doubts deepened about Europe’s ability to stop its sovereign debt crisis from spinning out of control, with Germany and France split over the European Central Bank’s bond buying role.

The focus of concern is shifting to difficulties in securing funds from money markets, where strains are intensifying due to rising government borrowing costs that have made financial institutions reluctant to buy sovereign bonds and lend to each other for fear of counterparty exposure to euro zone debts.

France and Spain will hold bond auctions later on Thursday, and the results are keenly awaited for clues over whether soaring yields can be capped.

“European leaders have failed to clear up doubts about the effectiveness of the region’s bailout fund, as it has yet to collect funds, aggravating investor jitters,” said Yuji Saito, director of the foreign exchange division at Credit Agricole Bank in Tokyo.

“Unless the uncertainty over the European Financial Stability Facility is removed, anxiety will persist, weighing on riskier assets and pushing investors to hoard dollars.”

MSCI’s broadest index of Asia Pacific shares outside Japan steadied after falling as much as 1.1% led by financials. Japan’s Nikkei stock average turned positive, closing up 0.2%.

European stocks were set to fall, with spreadbetters seeing London’s FTSE 100 opening down 0.6%, Frankfurt’s DAX down 1.3%, and Paris’ CAC-40 1.2% lower. For more visit: Business Standard

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