Asian shares slip on Italy downgrade, Europe woes

Asian stock markets extended their losses after the eurozone debt crisis deepened when ratings agency Standard & Poor\'s downgraded Italy\'s sovereign debt. The move further depressed the already weak euro, which on Tuesday sent Tokyo shares tumbling, with exporters taking the brunt of the selling. It also compounded concerns that Athens is close to defaulting on its debt obligations as Greek and European leaders make very little progress on solving the country\'s financial woes, which analysts say could infect other economies. \"The S&P downgrade itself is not a surprise, but the concern is whether Greek\'s sovereign debt crisis will spread to Italy and Spain,\" said Hiroichi Nishi, general manager at SMBC Nikko Securities. Tokyo, which was closed for a public holiday on Monday, fell 1.40 percent by the break. Sydney dropped 1.07 percent, while Hong Kong lost 0.17 percent, Seoul dipped 0.11 percent and Shanghai was 0.10 percent off. Regional bourses opened soon after S&P said it had downgraded Italy\'s debt to \"A/A-1\" from \"A+/A-1+\", citing economic, fiscal and political weaknesses in the eurozone\'s third-largest economy. It said Rome\'s weak governing coalition would \"limit the government\'s ability to respond decisively\" to events. \"We believe the reduced pace of Italy\'s economic activity to date will make the government\'s revised fiscal targets difficult to achieve,\" S&P said in a statement. \"The picture in Europe, full stop, is not getting any better. They can patch up any way they want the Greek situation but the problem is going to persist,\" HiFX senior trader Stuart Ive in Auckland told Dow Jones Newswires. \"If it doesn\'t persist in Greece, it will persist in Portugal or Ireland, or Italy or Spain,\" Ive said. Greece\'s Finance Minister Evangelos Venizelos was due Tuesday to continue talks with the International Monetary Fund, European Union and European Central Bank to agree a deal that would see Athens receive the next tranche of a bailout. The euro fell in early Asian trade, buying $1.3604, down from $1.3679 late Monday in New York, while it slipped to 104.10 yen from 104.89 yen. The dollar edged down to 76.53 yen from 76.59 yen. On oil markets New York\'s main contract, WTI light sweet crude for October delivery, was up 33 cents to $86.03 a barrel in Asian morning trade, and Brent North Sea crude for November climbed 69 cents to $109.83. Gold fetched $1,780.90 an ounce by 0245 GMT, well down from the $1,819.15 level it was at by 1000 GMT Monday.