Asian shares fall on euro zone contagion fears

New leaders in debt-ridden Italy and Greece have offered investors some hope that they can solve their fiscal woes, avoiding the spread of a debt crisis that has threatened to drag the world economy into recession.However, the euro lost ground against the dollar and borrowing costs in Italy, Spain and even France rose amid concerns about the eurozones debt financing, while figures released Tuesday showed the 17-nation bloc saw just 0.2 percent growth in the third quarter.Tokyo was off 0.60 percent, Sydney was down 0.35 percent, and Seoul was 0.55 percent lower. Hong Kongs benchmark Hang Seng index lost 2.26 percent while Chinese shares fell 1.73 percent.The bigger worry for markets is the situation in the eurozone, which appears to be deteriorating by the day, Credit Agricole said in a note to clients.Contagion has spread across eurozone bond markets like wildfire and the lack of action to create a firewall means that there is little to extinguish it. The interest rate Italy must pay on its 10-year bonds jumped back above the 7.0 percent level seen as unsustainable for the country to service its debt while Spanish 10-year government bonds rose to 6.341 percent.Even France was punished, with its 10-year bonds at 3.683 percent, more than twice as much as regional economic powerhouse Germany must pay to borrow.Italian prime minister designate Mario Monti vowed to unveil a new government that can overcome Romes debt crisis, with the premier-in-waiting set to be officially sworn in later Wednesday.In Athens, the newly installed premier Lucas Papademos was racing to adopt deeply unpopular reforms demanded by Greeces international creditors before the release of bailout loans crucial to avoiding bankruptcy.Papademos government is expected to be confirmed in a vote of confidence on Wednesday but must hold early elections in a few months.Despite the caution over Europe, investors were buoyed by US figures released Tuesday that showed retail sales continued to rise in October, helped by a jump in electronics and appliances.A key manufacturing index for New York also surged to its first positive reading in six months in November, suggesting an upturn in business conditions.The data helped US markets stay in positive territory on Tuesday, with the Dow Jones Industrial Average closing 0.14 percent higher, the broad-based S&P 500 rising 0.48 percent and the Nasdaq Composite up 1.09 percent.On Wednesday, Beijing said foreign direct investment in China eased in October as Western trade partners struggled to resolve their economic woes.Investment reached $8.33 billion in October, up 8.75 percent year-on-year, but lower than the $9.05 billion invested in September.On currency markets, the euro lost further ground against the dollar in Tokyo trade, with the common unit falling to $1.3460 and 103.70 yen from $1.3536 and 104.31 yen in New York late Tuesday.The dollar was flat at 77.07 yen compared with 77.05 yen.New Yorks main oil contract, light sweet crude for delivery in December, fell 18 cents to $99.19 per barrel.Gold was trading at $1,770.20 an ounce by 0330 GMT, compared with $1,779.95 late Tuesday.