HONG KONG: Asian markets fell and the euro continued its struggles as fresh concerns over Spain and Italy rattled investors despite another strong batch of jobs data from the United States.
Regional dealers followed European losses caused by a warning from Madrid that its banks may hold more bad loans than thought, while a French bond auction saw weak demand and Italy's leader paid an unplanned visit to Brussels.
Tokyo fell 1.03 percent by the break, Hong Kong lost 1.45 percent, Sydney was 0.58 percent lower, Seoul gave up 1.39 percent, Shanghai added 0.24 percent and Taipei was 0.14 percent off.
In Spain the new economy minister warned that banks may face up to 50 billion euros ($65 billion) in bad loan provisions.
Luis de Guindos' estimate, provided in a Financial Times interview, was higher than many forecasts and compared with a European Banking Authority finding that the five biggest banks needed 26 billion euros more in capitalisation.
The country's new government also warned separately that the social security fund's accounts are worse than had been feared.
In France, whose top notch AAA status is under threat, a bond auction sold its planned amount of debt with only modest increases in its borrowing price but saw lower demand, a lack of enthusiasm also seen in an operation by Germany on Wednesday.
And Italian Prime Minister Mario Monti rattled nerves with an unannounced visit to Brussels. Traders became nervous despite diplomatic sources saying Monti, who meets French President Nicolas Sarkozy on Friday in Paris, was making only a private visit.
"Sentiment is mixed into the end of the week. On the one hand firmer US data has helped to buoy confidence, leading to expectations of a relatively decent December US payrolls outcome.
"On the other hand, the situation in the eurozone continues to remain troubling," said Credit Agricole in a note to clients, according to Dow Jones Newswires.
US payrolls firm ADP said the private sector boosted hiring in December to the highest level in a year, with 325,000 jobs created in the month, well up from the 180,000 forecast by analysts.
New claims for US unemployment benefits meanwhile fell 15,000 to 372,000 in the week to December 31, the data combined suggesting the world's biggest economy could be improving.
Ian Shepherdson, chief US economist at High Frequency Economics, called the report "spectacular".
The report added to growing hopes that the world's biggest economy is slowly picking up pace.
However, it added to the pressure on the euro, which hit $1.2771 in New York late Thursday -- its lowest point since September 2010. In early Asian trade it bought $1.2793.
The euro was at 98.73 yen, slightly up from New York, where it fell to an 11-year low of 98.48 yen.
The dollar was at 77.16 yen, unchanged from New York.
In Tokyo Olympus shares fell more than four percent to 985 yen after whistle-blowing former chief executive Michael Woodford said he would abandon his bid to take over the helm of the scandal-hit precision equipment maker.
The stock then recovered some of its losses to stand at 1,019 yen, down 1.16 percent.
Oil retreated after recent heavy gains on the back of tensions between crude-producing Iran and the United States and Europe.
New York's main contract, West Texas Intermediate crude for delivery in February was down 44 cents to $101.37.
Brent North Sea crude for February shed 41 cents to $112.33.
Gold stood at $1,626.70 an ounce at 0300 GMT compared with $1,612.55 late Thursday.
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