HONG KONG: Asian markets slipped on Wednesday as unease over the eurozone debt crisis overshadowed a strong rise in consumer confidence in the United States.
On the first full day of trade after Christmas eyes were on Italy, which will hold a debt auction later in the day amid weakened confidence after lenders in Europe deposited a record amount with the central bank.
Tokyo was flat by the break, Hong Kong slipped 0.54 percent, Sydney fell 1.10 percent, Seoul shed 0.98 percent and Shanghai was 0.58 percent off.
Markets were given a strong cue from the United States, where another batch of upbeat data indicated a brighter outlook for the world's biggest economy.
The Conference Board reported a strong surge in consumer confidence this month, with its monthly index surging to its levels of early 2011 after the collective mood soured deeply in the middle of the year.
"This is traditionally a good time of the year for equities, but we have 20 billion euros of Italian government debt being auctioned in the next two days, so there is some event risk which will probably cap any gains," IG Markets institutional dealer Chris Weston said.
Italy's auction of bonds is seen as a gauge of whether Rome's bonds will be purchased by European banks after the European Central Bank's cash infusion last week.
The yields on benchmark 10-year bonds are sitting at the crucial seven percent level seen as unsustainable for governments to service their debts.
Adding to investor concerns about a possible credit crunch in Europe was news that the region's banks deposited a record amount of overnight funds at the European Central Bank Monday.
Lenders put 411.8 billion euros ($535 billion) on deposit for 24 hours at the ECB, beating the previous record of 384.3 billion euros seen in June 2010, showing that banks continue to be reluctant to lend to each other on the interbank market.
Last week, more than 500 banks borrowed a record 489.2 billion euros from the ECB in a new three-year lending facility.
On forex markets, the dollar stood at 77.79 yen, from 77.88 in New York late Tuesday.
The euro was at $1.3069 and 101.68 yen, compared with $1.3070 and 101.77 yen in New York.
Oil dipped slightly after surging Tuesday on Iran's warning that it could shut down the strategic Strait of Hormuz if the West applies sanctions on Iran's oil exports.
New York's main contract light sweet crude for February delivery lost four cents to $101.30 barrel and Brent North Sea crude for February delivery shed 20 cents to $109.07.
Gold stood at $1,588.01 an ounce at 0200 GMT, compared with $1,597.27 late Tuesday.
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