Shares in Asia suffered heavy selling on Tuesday as fears over European political stability resurface.

The benchmark Nikkei 225 index declined 213 points at 11,046 in Tokyo while the Hang Seng retreated 536 points at 23,148.

Pressure is growing on Spanish Prime Minister Mariano Rajoy to resign following a corruption scandal. Rajoy said the allegations that he members of his party accepted secret payments are false and pledged that he would take Spain out of its financial crisis. Even so, his credibility is now being questioned.

Meanwhile in Italy, former Prime Minister Silvio Berlusconi's party won strong gains in polls ahead of national elections later this month. Berlusconi's pledge to refund a property tax paid last year proved popular with voters but the strong result sparked concern about reforms in the country.

Fears about political stability in Europe prompted a steep wave of profit taking, with shares with heavy exposure to Europe enduring the biggest losses.

Banking giant HSBC was a big decliner with its shares down 2.7% in Hong Kong. Bank of China dropped 3.8%.

Oil giant Sinopec tumbled 6.4% after it raised $3.1bn via a private placement, a 9.5% discount to Monday's closing price.

In Japan exporters such as Sharp, Mazda and Fuji Heavy Industries all headed lower.

Retailer Fast Retailing lost 3.2% after it posted a 5.5% decline in same-store sales at its Uniqlo clothing store chain.

Electronics company Hitachi slumped 6.4% after its third quarter profits fell short of guidance and it full year outlook disappointed.

Japan Airlines was a rare gainer on Tuesday, up 5.1%, after it lifted its operating profit target for its financial year. The airline said it would pay a dividend.

In Australia, the Reserve Bank of Australia kept interest rates steady at 3% after cutting rates in December.


CJ

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