By V. Phani Kumar, Colin Ng and Leslie Shaffer HONG KONG (MarketWatch) -- Most Asian stock markets declined Wednesday as renewed concern about the health of European banks hurt sentiment, pushing the yen to a new 15-year high against the U.S. dollar and dragging Japanese shares sharply lower. Japan's Nikkei Stock Average dropped 2.2%, Australia's S&P/ASX 200 shed 0.8%, South Korea's Kospi lost 0.5%, Hong Kong's Hang Seng Index declined 1.5% and China's Shanghai Composite slipped 0.1%. In afternoon trading, India's Sensex was down 0.2% and Singapore's Straits Times Index had given up 0.8%. Dow Jones Industrial Average (DJIA 10,341, -107.24, -1.03%) futures climbed 14 points in screen trade. Financial shares around the region lost ground, tracking losses in their European and U.S. counterparts, as investors' attention refocused on the fiscal health of various European nations, especially Ireland, Portugal and Greece. The Wall Street Journal Tuesday reported that stress tests of European banks earlier this year understated some lenders' holdings of potentially risky government debt. "Investors have quickly forgotten the disbelief and skepticism when the U.S. bank stress-tests results were released in May 2009," said NRA Capital Chairman Kevin Scully. He added that the latest stress-test concerns were overrated. He said the outcome of the U.S. bank stress test enabled lenders to recapitalize using private-sector resources and led to a rally in U.S. financial stocks. "I expect the same will apply to the E.U. banks as well." National Australia Bank (NABZY 21.95, -0.25, -1.13%) (AU:NAB 23.95, -0.45, -1.84%) dropped 1.8% in Sydney, Japan's Mitsubishi UFJ Financial Group (MTU 4.84, +0.04, +0.83%) (JP:8306 401.00, -7.00, -1.72%) shed 1.7% in Tokyo, HSBC Holdings' (HBC 50.58, -0.10, -0.20%) (HK:5 78.25, -1.00, -1.26%) Hong Kong-listed shares shed 1.3% and South Korea's Shinhan Financial Group (SHG 72.80, -2.10, -2.80%) fell 2%. In Japan, sentiment toward the nation's exporters soured as the yen soared to a new 15-year high versus the U.S. dollar before giving back some ground in late Asian trading. The dollar hit a fresh 15-year low of 83.34 yen, and was at 83.63 yen, compared with 83.80 yen late in New York trade. The euro was at 105.91 yen versus 106.33 yen in New York and at $1.2663 against $1.2687. The yen rallied despite Finance Minister Yoshihiko Noda's comments Wednesday that the government will take "decisive" steps against the rising yen, if necessary, and that those measures included foreign-exchange market intervention. It was the first time Noda has mentioned that currency-market intervention was a policy option. Read full story. "Japan's situation is particularly grim amid the possibility the yen may strengthen further," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets. "Expectations are slim that the government will intervene in currency markets," unless the U.S. dollar falls below 83 yen, he said. Pacing the decline, Toyota Motor Corp. (TM 69.24, -0.47, -0.67%) (JP:7203 2,875, -61.00, -2.08%) shed 2.1%, Honda Motor (HMC 33.18, -0.71, -2.10%) (JP:7267 2,744, -71.00, -2.52%) lost 2.5% and Sony Corp. (SNE 29.52, -0.40, -1.34%) (JP:6758 2,458, -56.00, -2.23%) gave up 2.2%. "If the yen continues to strengthen on the back of government inaction, there will be further concerns that companies will need to significantly lower their profit forecasts," said Yutaka Yoshii, general manager at Mito Securities. Advantest (ATE 19.49, -0.02, -0.10%) (JP:6857 1,583, -72.00, -4.35%) dropped 4.4%, hit by the stronger yen and a Nikkei report that the company is likely to book an operating profit exceeding 10 billion yen ($119 million) for the current fiscal year. That's below the latest Quick analyst consensus forecast of around 17 billion yen. The report couldn't be verified. Mining stocks also dropped in Sydney after most regional markets retreated, though some defensive sector stocks advanced. BHP Billiton (BHP 69.72, -1.08, -1.53%) (AU:BHP 37.91, -0.53, -1.38%) fell 1.4% and Woodside Petroleum gave up 1.4%. But Foster's Group (AU:FGL 6.34, +0.27, +4.45%) (FBRWY 5.46, -0.06, -1.09%) climbed 4.5% after rejecting an unsolicited bid for its wine assets from a private-equity firm, which valued the unit at 2.3 billion to 2.7 billion Australian dollars ($2.07 billion to $2.43 billion). The company is working on a demerger of its beer and wine divisions. Telstra (AU:TLS 2.87, +0.02, +0.70%) (TLSYY 12.98, +0.02, +0.15%) climbed 0.7% in anticipation of National Broadband Network-related payments after Australia's Labor government retained power Tuesday. "That's a big sell down in the region, but it's probably only a one-day influence. Quite frankly, I think the Australian equities market looks good. It's trying hard and there are plenty of stocks that are up today," said Southern Cross Equities director Charlie Aitken. He said the market was being restrained by selling from Asian funds making room for China Mobile shares after Vodafone Group sold its 3.2% stake in the Chinese telecom company for 4.3 billion pounds ($6.6 billion). Shares of China Mobile (HK:941 78.95, -3.05, -3.72%) (CHL 50.25, -1.17, -2.27%) , a heavyweight in the Hang Seng Index, dropped 3.8% on the news, weighing on the broad market. South Korean shares dropped on selling in Samsung Electronics (SSNLF 0.00, 0.00, 0.00%) and Hynix Semiconductor , after UBS Investment Research downgraded the stocks to neutral from buy, citing a deteriorating outlook for semiconductor memory chips. Samsung Electronics dropped 2.2% after its chip \-division chief said Tuesday that an oversupply in dynamic random access memory chips -- known as DRAM chips and a key computer component -- may occur early next year if global demand for personal computers slows further. Chip maker Hynix Semiconductor fell 3.5%. Hyundai Motor Co. (HYMTF 20.60, +0.10, +0.49%) added 2.4% on improved domestic and U.S. market shares in August, while Kia Motors Corp. (KIMTF 0.00, 0.00, 0.00%) tacked on 2.3% after reporting strong domestic sales of new models. Among other markets, New Zealand's NZX 50 ended 0.4% lower and Philippine shares rose 0.8%. In afternoon trading, Thailand's SET Index dropped 0.4%, while the Indonesian stock market was closed for a holiday. Lead September Japanese government bond futures were up 0.23 to 141.78 points, with the yield on the 10-year cash JGB down 1.5 basis points at 1.125%. Spot gold was at $1,208, up $2.30 from New York closing levels, while October Nymex crude-oil futures dropped 36 cents to $73.73 a barrel on Globex.

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