* Stocks markets on track for worst quarter since Q4 2008
* Euro on defensive as Swiss franc gains
* Oil steady as storm seen missing key U.S. Gulf
facilities
(Repeats to more subscribers)
By Alex Richardson
SINGAPORE, June 29 (Reuters) - Asian stocks were on course
on Tuesday for their worst quarterly performance since the end
of 2008, as the tepid nature of rich world's recovery from
global recession keeps investors on the defensive.
The euro was under pressure and dangerously close to a key
support level, as funding concerns about the euro zone drove
investors to the safe-haven of the Swiss franc and market
players looked anxiously towards European debt sales this week.
[]
"Aside from buying on dips, it's possible that European and
U.S. investors are buying for window dressing for the end of
the first half," said Mitsuo Shimizu, deputy general manager at
Cosmo Securities.
"Still, the move by institutional investors to shrink their
riskier asset holdings, which seems to have run its course for
now, is not something that will go away very easily going
forward."
U.S. stocks closed slightly lower on Monday, as gains in
consumer-related stocks such as Coca Cola Co <KO.N> and Procter
& Gamble Co <PG.N> were offset by losses in the energy sector.
[]
Tokyo's Nikkei <> rose 0.6 percent, but MSCI's
broadest index of Asia-Pacific shares outside Japan fell 0.4
percent.
The Nikkei has fallen nearly 13 percent in the second
quarter and the MSCI AP ex-Japan is down more than 6 percent,
putting both on track for their worst quarterly performance
since the meltdown in the final months of 2008 following the
collapse of Lehman Brothers.
World stock markets rebounded strongly in 2009, but
investors are now fretting about the uncertainty of the outlook
as governments -- many facing ballooning debt burdens -- start
to turn off the stimulus that supported the fledgling recovery.
EURO WOES
The euro <EUR=> traded around $1.2280, having lost 0.8
percent on Monday, to be just above near-term support at
$1.2254, the low struck on June 25.
The euro was dragged down by losses against the Swiss
franc. It was trading at 1.3360 francs <EURCHF=>, having
dropped to a record low of 1.3329 in the previous session after
barriers and stop loss sell orders at 1.3400 were taken out.
The pair has now lost 4 percent since June 17, when the
Swiss central bank backed off from a pledge to fight excessive
appreciation in the franc.
"The list of negatives for the euro continues to grow.
There's never any shortage of reasons to sell it," said Brian
Dolan, chief currency strategist at Forex.com in Bedminster,
New Jersey.
Traders in Asia said investors were wary of growth-linked
currencies and the euro amid festering problems in the euro
zone, where funding pressures re-emerged with interbank lending
rates hitting their highest in almost seven months on Monday.
Banks must repay 442 billion euros ($545.5 billion) to the
European Central Bank on Thursday, leaving a potential
liquidity shortfall in the financial system of more than 100
billion euros. []
Financial markets will closely watch debt auctions by
France and Spain later this week after tepid demand for Italy's
sale of 7 billion euros of government bonds on Monday kept
worries about euro zone debt troubles alive.
The premium investors demand to hold 10-year Italian,
French and Spanish government bonds, rather than euro zone
benchmark German Bunds, all widened.
Oil <CLc1> was steady above $78 a barrel, as forecasts
indicated Tropical Storm Alex was likely to skirt the main
production region in the U.S. Gulf of Mexico. []
Concerns about Europe's debt burden contributed to a
rebound for gold <XAU=>, with spot prices for the safe-haven
metal rising $2.55 to $1,238.60 an ounce. []
"Gold is likely to remain pretty well supported in the
current quarter. Safe-haven demand for gold remains prominent,"
said David Moore, a commodity strategist at Commonwealth Bank
of Australia in Sydney.
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