Traders on the Tokyo Stock Exchange work at a terminal in Tokyo Thursday, May 31, 2012. Japan's Nikkei 225 index shed 158.62 points, or 1.84 percent, from Wednesday to end the morning session at 8,474.57. (AP Photo/Koji Sasahara)
Traders on the Tokyo Stock Exchange work at a terminal in Tokyo Thursday, May 31, 2012. Japan's Nikkei 225 index shed 158.62 points, or 1.84 percent, from Wednesday to end the morning session at 8,474.57. (AP Photo/Koji Sasahara)
A man walks by the electronic stock board of a securities firm in Tokyo Thursday, May 31, 2012. Japan's Nikkei 225 index shed 158.62 points, or 1.84 percent, from Wednesday to end the morning session at 8,474.57. (AP Photo/Koji Sasahara)
A Japanese chef carries a wrapped plate of sushi past the electronic stock board of a securities firm in Tokyo Thursday, May 31, 2012. Japan's Nikkei 225 index shed 158.62 points, or 1.84 percent, from Wednesday to end the morning session at 8,474.57. (AP Photo/Koji Sasahara)
A man walks by the electronic stock board of a securities firm in Tokyo Thursday, May 31, 2012. Japan's Nikkei 225 index shed 158.62 points, or 1.84 percent, from Wednesday to end the morning session at 8,474.57. (AP Photo/Koji Sasahara)
BANGKOK (AP) ? Fears that Europe's debt crisis is morphing from Greece to engulf bigger economies such as Spain and Italy sent Asian stock markets lower Thursday.
Spain's banking system is under strain a week after Bankia, its fourth-largest bank, required $23.8 billion in government aid to cover souring real estate loans.
Investors are increasingly worried that problems might surface at other Spanish banks. Many lent heavily during the nation's real estate bubble and losses from the real estate crash might be too big for Spain's government to shoulder.
Another negative signal came from the European Central Bank, which said Spaniards pulled billions in deposits out of their banks last month, raising concerns of a larger bank run.
On Wednesday, borrowing rates rose sharply for Spain and Italy, a sign that investors are increasingly uneasy about their ability to pay off their debt.
Japan's Nikkei 225 index tumbled 1.9 percent, also hit by a stronger yen which erodes the profits of the country's exporters. Mazda Motor Corp. plunged 5.8 percent and Canon Inc. fell 4.4 percent.
Hong Kong's Hang Seng lost 1.4 percent to 18,423.61 and South Korea's Kospi was down 1.3 percent at 1,821.32.
Australia's S&P/ASX 200 shed 1.1 percent to 4,051. Benchmarks in Singapore, Taiwan, mainland China, Indonesia and the Philippines also fell.
Energy shares fell on lower oil prices. Hong Kong-listed Sinopec, Asia's biggest oil refiner, fell 1.8 percent. China National Offshore Oil Corp., or CNOOC, lost 2.7 percent.
The Dow Jones industrial average closed down 1.3 percent Wednesday at 12,419.86. The Standard & Poor's 500 index lost 19.10 points to 1,313.32.
The Nasdaq composite index fell 33.63 to 2,837.36. Rising demand for safe investments pushed the yield on the benchmark 10-year Treasury note down to 1.61 percent, apparently the lowest since World War II.
Benchmark oil for July delivery was down 19 cents to $87.63 per barrel in electronic trading on the New York Mercantile Exchange. The contract slid $2.99 to close at $87.82 on the Nymex on Thursday.
On Wednesday, the euro plunged below $1.24 for the first time in nearly two years as traders fretted over Spain's economy. The euro fell to $1.2369 from $1.2382 late in the day in New York. The dollar fell to 78.75 yen from 79.07 yen.
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