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Asian Markets Are Mixed, Investors Eye US Debt

Asian markets were mixed Thursday in choppy trade as concerns grew that rising yields on U.S. government debt could push up borrowing costs and choke off a potential recovery in the world's largest economy. South Korea though managed a 2 percent jump later in the session.

Markets in Hong Kong and China are closed for a public holiday. Hong Kong reopens on Friday while China reopens on Monday.

U.S. Treasurys sold off sharply Wednesday, with the 10-year yield hitting a six-month high at 3.73 percent. The yield curve steepened to record levels with the spread between the 2-year and 10-year yield at 275 basis points, as investors in the mortgage-backed securities market hedged against higher rates. Treasurys were little changed so far in Asian hours.

The benchmark 10-year Japanese government bond's yield hit a six-month high in Asian trade.
The accompanying rise in bond yields raised worries about a U.S. economic recovery as this would lead to increased borrowing costs for consumers and corporations.

The U.S. dollar pushed higher against the yen and the euro , as fears of a credit rating downgrade for the U.S. eased when rating agency Moody's confirmed its top credit rating. Oil prices were trading near $63 a barrel after comments from Saudi Arabia, OPEC's largest member, that prices could move higher.

Japan's Nikkei 225 Average edged up 0.1 percent, supported by hopes that Japan's economy may have seen its worst phase and is headed for a recovery. Wigmaker Aderans Holdings fell 7.5 percent, becoming the largest percentage loser on the Nikkei 225, after media reported that shareholders have accepted a proposal for new management chosen by the company's largest shareholder, U.S. activist fund Steel Partner.

Seoul shares ended 2 percent higher after volatile trade, with gains led by banks after the government loosened capital requirements, while key exporters including Samsung Electronics also rallied.

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Australian stocks fell 0.7 percent as optimism that an economic recovery is within sight was dented by Australian business spending data and concern over the impact of the rising cost of U.S. debt.

Singapore's Straits Times Index was down 0.6 percent. Genting Singapore shares were flat. The family that owns Malaysian gaming firm Genting sold about 9 percent of shares in its Singapore unit.