Asia reverses gains on contagion fears Asian shares went into reverse, after posting steep gains the previous session, as the €100bn bailout of Spain's banks failed to quell fears of financial contagion from Europe's debt crisis. The FTSE Asia Pacific index lost 0.6 per cent to 218.24 with Japan's Nikkei 225 Stock Average off 1 per cent to 8,536.72 and South Korea's Kospi Composite index down 0.7 per cent to 1,854.74. Hong Kong's Hang Seng index shed 0.4 per cent to 18,872.56 while China's Shanghai Composite index lost 0.7 per cent to 2,289.79. Australia's S&P/ASX 200 index inched up 0.2 per cent to 4,072.88 as investors returned from a three-day weekend, helped by Qantas Airways, which soared 10.8 per cent to A$1.08 in Sydney on news the carrier is putting in place steps to defend against a possible hostile takeover attempt. Initial euphoria over Spain's bank rescue faded as investors turned their attention to problems in Italy and the June 17 election in Greece that could determine the country's fate within the eurozone. Risks of further credit rating cuts kept Spain's borrowing costs high amid renewed concerns about the government's ability to finance its rising public debts. Investors are now keeping an eye on Italy's debt auction on Thursday. "The [ECB] loans will add directly to the Spanish government's liabilities and so increase the debt-to-GDP ratio by around 10 per cent, leaving further downgrades likely," said strategists at RBC Capital. Energy producers slumped as global growth concerns pushed benchmark US crude futures below $83 a barrel for the first time since October. JX Holdings fell 3.1 per cent to Y373 and Inpex, Japan's biggest oil and gas company by market capitalisation, shed 0.7 per cent to Y450,000 in Tokyo. Cnooc slid 0.8 per cent to HK$14.54 in Hong Kong while in Shanghai, Shenhua Energy fell 2.4 per cent to Rmb23.59 and Yanzhou Coal lost 1.6 per cent to Rmb21.16. A stronger yen weighed on shares of exporters in Tokyo as concerns about Europe boosted demand for haven assets, pushing the Japanese currency above the Y99 mark against the euro. Sony declined 2.1 per cent to Y1,025, Mazda Motor fell 2.9 per cent to Y99 and Pioneer shed 2.7 per cent to Y291. Exporters in Seoul were also weaker, with LG Electronics off 2.8 per cent to Won67,200 and Samsung Electronics down 1 per cent to Won1,255,000. Miners lost ground on growth concerns with BHP Billiton 0.6 per cent lower to A$31.72 and Rio Tinto down 1.7 per cent to A$54.65 in Sydney. Steelmakers slumped in Shanghai, with Baoshan Iron & Steel down 3.3 per cent to Rmb4.43. In Hong Kong, Esprit Holdings gained 0.2 per cent to HK$13.50, Aluminum Corp of China dropped 1.5 per cent to HK$3.21, and HSBC Holdings fell 0.8 per cent to HK$63.85. On the mainland, higher-than-estimated new Chinese bank loans boosted property developers with Poly Real Estate Group, the country's second-largest developer by sales, up 4 per cent to Rmb14.63. Bank stocks slipped, however, with BNP Paribas cutting estimates for profits and margins in the sector after Beijing's recent interest rate cut. China Construction Bank, one of the nation's biggest lenders, was down 0.7 per cent to Rmb4.42.