Asian shares fell on Thursday after Italy's record-high cost of borrowing renewed fears over the eurozone debt crisis.

意大利创记录的政府公债以及欧盟债务危机导致周四亚洲股市下滑。

Japan's Nikkei index fell 2.9%, South Korea's Kospi shed 3.8% while Hong Kong's Hang Seng dropped 4.4%.

The falls in Asia followed losses in the US markets.

The cost of borrowing on Italian government bonds jumped to 7% on Wednesday, a level considered unsustainable by economists¹.

The high interest rate means that if Italy were to borrow money today, with the aim of paying it back in 10 years, it would have to pay an interest of 7%.

However, Italy has a low growth rate, which means it would struggle to repay its debt at these rates.

On Thursday, Italy will auction² as much as 5bn euros ($6.7bn; £4.2bn) of one-year bonds, a sale that will be keenly watched by economists as well as policymakers.

Analysts³ said action needed to be taken in order to calm the markets.

"Europe has moved from a manageable crisis in Greece to a much bigger challenge in Italy," said Frederic Neumann from HSBC in Hong Kong.

"We need radical⁴ solutions at this point to backstop the markets."

Market Movers

Shares of banks in both Japan and Australia were hit particularly hard. In Tokyo, Sumitomo Mitsui Financial Group tumbled 5.3%, while Mizuho Financial group fell 3.8%.

In Sydney, Westpac Banking⁵ Corporation dropped 3.6%, to its lowest level in a month.

Economists are concerned that the global banking system could still be affected⁶, regardless of whether there is a resolution to the eurozone crisis.

"Whatever they come up with, it doesn't avoid a European recession," said Su-Lin Ong at RBC Capital Markets.

"Increasingly, there is a risk that it spills into the banking system and becomes an issue of credit, and the lifeline of economies freezes up again," she said.

Last month, in an attempt to ease concerns about the Greek debt crisis, eurozone leaders asked banks to raise more capital to protect themselves against any losses resulting from future defaults by Greece.

At the same time, banks also accepted a 50% loss on the money they had lent to Greece.

The fear is that if Italy's debt crisis worsens, similar measures may have to be taken by banks that are exposed to its debt.