Yields on Italy's key 10-year bonds surged to 235 points above those of benchmark German bunds, its highest level in more than four years, in a sign of falling confidence among investors. Gold and platinum producer Anglo American traded 2.76% higher at 1,846.60 while Rio Tinto, Glencore and Chilean miner Antofagasta were also among the top ten movers higher.
On Wednesday Japan's Nikkei 225 stock index dropped 1.5%, South Korea's Kospi dropped 1.8% and the Hang Seng in Hong Kong slipped 1.2%.
The Milan stock index was down more than 2%, weighing particularly hard on banks, and Italian bonds suffered a plunge.
The EU's statistics authority, Eurostat, said inflation in the eurozone jumped to 1.9 percent in May, a sharp pick-up from the 1.2 percent recorded in April. The latest figures German and French retail sales figures have both deteriorated sharply. In New Zealand, the Reserve Bank's financial stability report is due out at 9am and traders will be watching for any comment related to the kiwi dollar. -North Korean summit and the U.S.
The US currency is heading for its best month in 1-1/2 years - a move that is hurting many emerging market countries that borrow in dollars.
National Australia Bank said in a commentary: "Fears of a euro existential crisis are gathering momentum amid simmering political turmoil in Italy". The climb in Italy's yields - yields move inversely to price - meant they were above the USA equivalent for the first time in over a year.
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Analysts are awaiting USA inflation data later in the week which could provide clues to future interest rate rises ahead of the Federal Reserve policy meeting next month.
Italy's president set the country on a path to early elections on Monday, appointing a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and passing the next budget.
Mattarella then turned to Cottarelli to form a neutral government of technocrats to lead Italy until early elections.
"Worries over geopolitics look set to hit Asia after sweeping through Europe and also the USA at the start of the week".
Oil prices were also down again as investors fret over Saudi Arabia and Russia's indication that they will lift an output cap that has helped support the crude market for the past two years.
US crude futures dropped to six-week low of $65.80 per barrel, shedding 3.1 percent and is on course to post its fifth day of decline.
ENERGY: U.S. crude oil fell 63 cents to $66.41 per barrel in electronic trading on the New York Mercantile Exchange.