Stock markets ebb as Spain bailout fears swirl

Asian stock markets continued to ebb Wednesday amid fears Spain will become the next European country to seek a bailout while some technology shares dropped after Apple's earnings fell short of expectations.

Global markets have been roiled by a sudden surge in Spain's borrowing costs above 7 percent, a level that is likely unaffordable if sustained.

Expectations are increasing that Spain's debt-laden government will follow Ireland, Portugal and Greece in seeking a financial rescue. Its cost would far exceed the previous bailouts of smaller European economies and might pose an existential threat to the euro currency that is shared by 17 nations.

Europe's prolonged crisis is dragging on global economic growth at the same time as China's economy slows from a breakneck pace and the U.S. recovery stumbles. But so far the downturn is not as severe as the economic crunch that followed the 2008 financial crisis.

"While the downside risks to the global outlook have increased, once again, in the past couple of months, it would require a significant worsening of the eurozone crisis or a much harder landing in China, most likely the two together, to push the global economy back into recession," IHS chief economist Nariman Behravesh said in a report.

Japan's Nikkei 225 stock average was down 0.7 percent at 8,426.41 and Hong Kong's Hang Seng dropped 0.2 percent to 18,872.54. South Korea's Kospi shed 0.7 percent to 1,782.05 and Australia's S&P/ASX 200 fell 0.4 percent to 4,118.70. The Shanghai Composite was up 0.1 percent at 2,147.77.

Asian technology shares were mixed after Apple Inc. surprised investors with a rare earnings disappointment after the closing bell on Wall Street.

Apple reported the smallest increases in revenue and income in years, badly missing analysts' expectations. Its sales were strong in terms of the numbers of iPads and iPhones sold but consumers were opting to buy the least expensive versions, slowing the company's revenue growth.

Samsung Electronics Co., which competes with Apple in smartphones and tablets, fell 0.4 percent while Japan's Sony Corp. was down 3.8 percent.

Taiwanese smartphone maker HTC Corp. added 2.2 percent.

In the US, the Dow Jones industrial average fell 104.14 points, or 0.8 percent, to end at 12,617.32 on Tuesday. It was the third triple-digit point loss in a row for the blue chip index.

In energy trading, benchmark crude for September delivery was down 6 cents at $88.44 a barrel in electronic trading on the New York Mercantile Exchange.

The contract rose 36 cents to end Tuesday in New York at $88.50.

Among currencies, the dollar rose 0.1 percent to 78.21 yen. The euro rose 0.1 percent to $1.2080.

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