2012.05.09 06:58:05 2nd UPDATE: Asian Shares Fall As Worries Over Europe Dominate

-- Asian markets follow falls in U.S. and Europe on Greek concerns -- Nikkei falls 1.5%, Hang Seng declines 1%, ASX slips 1.2% -- Australia releases Federal budget (Updates prices; adds paragraphs on Japanese companies; added information on Chinese banks; moved Seiko to the eleventh paragraph)) By Daniel Inman Of DOW JONES NEWSWIRES HONG KONG (Dow Jones)--Asian markets slid and the euro fell on fresh worries about the fragility of Europe's monetary union following failed coalition talks in Greece, while the strong performance of HSBC helped moderate losses in Hong Kong. Japan's Nikkei fell 1.5%, Korea's Kospi slipped 0.9%, and Australia's S&P ASX 200 was 1.2% lower. Singapore's Straits Times Index declined 0.8%, Hong Kong's Hang Seng Index was down 1%, and the China Shanghai SE Composite fell 1.3%. The yen was trading flat against the dollar at 79.775. The euro fell below $1.30 as Europe returned to the forefront of investor concerns, with inconclusive coalition talks between political parties in Greece failing to create a new government. That raises the likelihood of fresh elections, and stirs fears the country may not stick to austerity measures, and could even leave the euro zone. The cost of crude continued its decline Wednesday morning to $96.70, a 0.36% drop, following five days of declines. Greek concerns drowned out improving economic news from the U.S. and Europe, with strong industrial production data from Germany and a rising small-business optimism index in the U.S. Australia's S&P ASX 200 fell after as the government presented its federal budget, largely in line with expectations. Aiming for a surplus before a general election next year, the government scaled back defense spending and abandoned a planned corporate-tax cut. Although down 1%, the Hang Seng Index was supported by its largest constituent, HSBC, which was one of a handful of companies that rose. The bank is up 0.4% after releasing its first quarter earnings report on Tuesday. Profit before tax rose slightly more than expected, $6.78 billion, up 25% on the same period last year. Emerging market operations and investment banking were strong contributors to the rise. HSBC is acting as a counterbalance to the Chinese banks, which weighed down the index. The Big Four Chinese banks were all down, with China Construction Bank the worst performer, down 1.8%. While the Nikkei was dragged down by weakness in manufacturers and technology sectors, strong profit outlooks from major exporters boosted some stocks, suggesting strong fundamentals in key Japanese firms. Watch and clock maker Seiko leaped 8.7% on upbeat profit guidance, while Panasonic rose 1.7% after a Nikkei report said that the group will report a profit for the year ending March, versus forecasts for a loss for the year that ended March 31. Toshiba rose 0.3% after announcing late Tuesday that its operating profit for the current year was estimated to be Y300 billion, meeting market expectations. Dampening the positive outlooks in Japan is data communications company NTT Data, Japan's worst performer. The company fell by 11% after releasing a disappointing earnings outlook. The firm expects profit to be Y38 billion for financial year ending 2013, significantly lower than the Y48 billion consensus. TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkbackAsia@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments. (END) Dow Jones Newswires May 09, 2012 00:58 ET (04:58 GMT)