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Asian Stocks Fall As Global Economic Gloom Builds

Italy had to pay higher borrowing rates in its last bond auction of the year Wednesday. The third-largest economy among the 17 nations the use the euro paid 6.47 percent interest to borrow 3 billion euros ($3.95 billion) for five years â¿¿ up 0.17 percentage point from last comparable auction â¿¿ and the highest rate since the euro came into existence in 1999.

The higher rates make it more expensive for Italy to borrow money and reflect rising doubts that the country will be able to repay its debts.

"I cannot say it was really bad, but the yield is historically high. This says markets believe that European nations and their economies are still sluggish," said Wong.

Italy is one of a handful of European countries whose debt loads have raised the risk of default â¿¿ an event that could have catastrophic consequences for global banking, cause the euro currency to collapse and spark a global recession.

Oil prices, which plunged more than $5 on Wednesday, drove down energy-related shares. South Korea's S-Oil Corp. fell 4.7 percent. Hong Kong-listed China National Offshore Oil Corp. dropped 4.6 percent.

Asian banking shares fell on the heels of a downgrade by Fitch Ratings of five major European commercial banks and cooperative banking groups. Hong Kong-listed Industrial & Commercial Bank of China, the world's largest bank by market value, fell 2.6 percent. Australia's Westpac Banking Corp. fell 1.8 percent.

Falling gold prices hit shares tied to the value of the precious metal. Zijin Mining Group, China's largest gold miner, fell 4.2 percent. Australia's Newcrest Mining was 2.8 percent down.

The Dow Jones industrial average fell 1.1 percent to close at 11,823.48 on Wednesday. The Standard & Poor's 500 index fell 1.1 percent to 1,211.82. The Nasdaq fell 1.6 percent to 2,539.31.

Benchmark oil for January delivery was up 76 cents at $95.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract declined $5.19 to finish at $94.95 per barrel on the Nymex.

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