Asian shares slid and the euro hovered near multi-year lows hit earlier on Monday, as Spain sparked concerns about its ability to stave off a sovereign bailout after two indebted regions sought financial assistance from the central government.
Fears the euro zone's fourth largest economy will be forced to follow Greece, Portugal and Ireland - which were thrown lifelines by international lenders after their borrowing costs shot above sustainable levels - drove the 10-year US Treasury yield to a record low 1.4365 per cent early in Asia.
Spain's fiscal woes triggered selling in oil, sending both Brent and US crude down more than $1 at $105.43 a barrel and 90.34 a barrel respectively, while corn and soybean prices eased from record highs scaled on Friday.
European stocks were likely to extend Friday's losses, while US stock futures fell 0.5 per cent to point to a sluggish start in Wall Street. Financial spreadbetters called the main indexes in London, Paris and Frankfurt to open down as much as 1.5 percent.
"Like so many times over the last two-plus years, the market has been reminded of the fragility of any rally, and how European landmines are forever present and ready to detonate at any time," said Cameron Peacock, analyst at IG Markets.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 2.2 per cent, which would mark its biggest one-day drop in about two months.
City A.M. Reporter