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Hong Kong - Asian markets extended their losses on Thursday and the euro dived as concerns over the eurozone debt crisis refused to abate, ahead of an auction of long-term Italian debt later in the day.
With trading light due to the Christmas holidays, Asia also had little cue for direction from Wall Street and Europe despite Rome enjoying a successful sale of short-term bonds on Wednesday.
Tokyo was 0.73% lower by the break, Hong Kong fell 1.06%, Sydney gave up 1.04%, Seoul lost 0.41% and Shanghai was 0.15% off.
Japanese exporters were hurt as the yen surged to its highest level against the euro since June 2001, with dealers also nervous ahead of the Italian bond sale.
In early Asian trade the European currency fell to ¥100.49, its lowest level since June 2001, compared with ¥100.80 in New York late on Wednesday, while it also hit an 11-month low of $1.2903 compared with $1.2912.
The dollar stood at ¥77.86, from ¥77.90 in New York.
Markets took scant relief from Italy's auction on Wednesday of €9.0bn in six-month bonds at low rates, with broader eurozone worries still dominating trade.
The average rate on the debt for Rome was 3.25%, half the 6.50% paid in a similar operation in November, when worries that Italian finances might collapse filled the markets.
"The short end (Italian debt auction) obviously went better than expected, but the big test for markets tonight (Thursday) will be how the long end goes," Sydney-based Macquarie Private Wealth division director Martin Lakos said.
"Trading is going to remain thin and volatile," he told Dow Jones Newswires.
Market watchers will be keen to see if Italy's 10-year bond sale generates interest rates of more than 7% - a level that is seen as unsustainable for governments to service their debt.
News that eurozone banks deposited a record amount of overnight funds at the European Central Bank (ECB) on Tuesday - breaking the record set the day before - indicated lingering tensions in the single-currency zone.
Banks put €452.03bn on deposit for 24 hours at the ECB overnight on Tuesday, beating the previous record of €411.8bn set Monday.
Rising levels of deposits are seen as a sign of market tension, with heavy use of the facility suggesting banks favour parking the money at low interest rates rather than lending to each other.
The huge amounts indicate banks are hoarding cash after more than 500 of them last week borrowed a record €489.2bn from the ECB in a new three-year lending facility.
Oil was mixed. New York's main contract, light sweet crude for delivery in February, was up 33 cents to $99.69 a barrel. Brent North Sea crude for February delivery was down 3c at $107.53.
Gold stood at $1 554.50/oz at 02:25 GMT, compared with $1 588.26 late on Wednesday.
