Asian stocks drift lower on European crisis fears

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By KELVIN CHAN, Associated Press

HONG KONG (AP) — Asian stocks drifted mostly lower on Wednesday, as persistent worries over European policymakers' ability to contain the continent's simmering debt crisis outweighed a big U.S. rally.

Japan's Nikkei 225 index gained 0.3 percent to 8,565.15 but South Korea's Kospi dropped 0.1 percent to 1,852.87. Hong Kong's Hang Seng was nearly unchanged at 18,886.45.

Australia's S&P/ASX 200 fell 0.4 percent to 4,058.30. Benchmarks in New Zealand and Singapore fell. Taiwan and mainland China's Shanghai Composite Index rose slightly.

Some markets saw a small bounce in early trading following a U.S. rally on comments by a Federal Reserve official in support of more measures to stimulate the economy. But the optimism soon faded. Investors are still wary about the situation in Europe. In Spain, ratings agency Fitch downgraded 18 banks and benchmark borrowing hit its highest level. In Greece, investors are nervously looking ahead to an election on Sunday to see if a party that has vowed to throw out the country's bailout agreement will win.

"Ahead of the Greek election, the market will likely continue to be range-bound, with support from the hope of more stimulus," strategists at Credit Agricole CIB said in a research note.

In the U.S., stocks staged one of their strongest rallies of the year after Charles Evans, president of the Fed's Chicago bank, told Bloomberg News he supported action to produce faster job growth. The Dow rose 1.3 percent to close at 12,573.80. The Standard & Poor's 500 index gained 1.2 percent to 1,324.18, and the Nasdaq composite rose 1.2 percent to 2,843.07.

Benchmark oil for July delivery was down 66 cents to $82.66 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 62 cents to finish at $83.32 on Tuesday.

In currencies, the euro weakened to $1.2482 from $1.2498 late Tuesday in New York. The dollar rose to 79.61 yen from 79.49 yen.

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