Hong Kong - Asian markets were mixed Wednesday and the euro struggled to recover from recent selling pressure as a brewing spat between Italy and the European Union (EU) fans fears of another crisis in the eurozone.
While the China-US trade row simmers, the source of angst among dealers has moved to Rome after the populist government passed a purse-busting budget last week that drew a rebuke from Brussels and warnings to abide by EU rules on public spending.
That prompted Italy's Deputy Prime Minister Matteo Salvini to threaten to seek damages for scaring off investors as the yield on government bonds surged, making it more expensive for it to borrow on international markets.
Traders were also spooked by comments from Claudio Borghi, the head of the lower house budget committee, that the euro was "not sufficient" to solve Italy's money problems.
While Ray Attrill, head of foreign-exchange strategy at the National Australia Bank, said while "Italexit" concerns were overblown, there were possible problems for Rome.
"The more significant issue is the risk - albeit not immediate - of Italy being downgraded to 'junk' status by at least two of the major ratings agencies.
"(That) would have profound implications for the ability of investors with minimum credit rating restrictions - including global sovereign bond market index trackers - from holding Italian government debt," he wrote.
The single currency extended losses on Wednesday.
Equity investors were also shifting warily, with Tokyo down 0.1% by the break a day after hitting a new 27-year high.
Hong Kong added 0.4% after plunging more than 2% and Sydney put on 0.3%. Singapore gained 0.6% and Jakarta was up 0.4% but Wellington, Taipei and Manila were all down.
Shanghai and Seoul were closed for public holidays.
On currency markets the dollar held above 15 000 Indonesian rupiah after breaking the mark Tuesday for the first time since 1998 during the Asian financial crisis.
The rupiah has suffered, along with many other emerging market units, as rising US interest rates lead investors to withdraw in search of better returns, while a jump in oil prices has hit Indonesia's current account - leading to concerns about its finances.
In a bid to support the local currency the government is considering measures to attract investment and help exporters.
Oil prices are holding around four-year highs but are taking a breather after recent gains, with dealers eyeing a slight increase in US stockpiles.
However, with Iranian supplies due to be taken out of the market, the dollar rising and Venezuela continuing to struggle observers are still predicting $100 a barrel is on the horizon.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER