(Refiles to clarify ECB chief speaks Wednesday ahead of an ECB
meeting on Thursday)
* Euro hovers around four-year-lows as debt concerns fester
* Eyes on ECB meeting for any fresh steps to ease strains
* Japan stocks fall 1 percent on Europe, stronger yen
* Investors stream into gold, sending prices to record
highs
By Sugita Katyal
SINGAPORE, June 9 (Reuters) - Asian stocks fell on
Wednesday and the euro wobbled near four-year lows after Fitch
Ratings said the UK faced a "formidable" fiscal challenge,
fueling concerns that Europe's sovereign debt problems could
stifle the global economic recovery.
Adding to the uncertainty, U.S. Federal Reserve officials
on Tuesday gave conflicting signals on the direction of
interest rates, highlighting an increasingly important split
within the central bank as the U.S. economy shows signs of
slowing. []
Investors were awaiting a speech from European Central Bank
chief Jean-Claude Trichet later in the day, ahead of an ECB
meeting on Thursday, for clues on whether it will announce
fresh steps to ease strains from the euro zone's debt crisis.
[]
The ECB could offer extra funds to banks and will be
pressed at a news conference for details of its surprise
government bond-buying program.
It is also expected to publish a new set of economic
forecasts for the region which are likely to signal somewhat
stronger activity despite worries that debt problems and
government austerity measures will sharply brake growth.
Solving the debt crisis implies heavy budget cuts at a time
when many analysts believe spending is needed to help keep the
global recovery on track.
Risk-averse investors have streamed into gold, sending
prices for the precious metal to a record dollar high, on
persistent fears that the euro zone debt problems will spread.
"Markets hate uncertainty and at the moment you've got a lot
of it," said Peter Wright, a dealer at Burrell & Co in
Australia.
Japan's benchmark Nikkei <> fell 1 percent, spiraling
toward a six-month low as worries the global recovery was
losing steam and as a stronger yen hurt major export4ers such
as Sony Corp <6758.T>, which fell nearly 2 percent.
The Nikkei's relative strength index has fallen to around
34, nearing the 30 level which indicates conditions are
oversold. But rebounds in recent weeks have proved short-lived
as wary investors quickly take profits on any rallies.
Stocks elsewhere in Asia also retreated, with the MSCI
ex-Japan index <.MIAPJ0000PUS> giving up early gains to stand
0.2 percent lower by late morning.
Hong Kong's Hang Seng index <> flitted in and out of
negative territory, while South Korea's KOSPI <> fell 0.5
percent, led by financials.
European shares fell on Tuesday, hitting a near two-week
closing low, after Fitch said Britain faced a "formidable"
challenge to cut government borrowing and needs more ambitious
plans to reduce the deficit over the medium term. []
U.S. stocks rose up to 1.3 percent in volatile trade
overnight, but investors shied away from larger companies which
have significant exposure to Europe. []
The euro slipped to $1.1945 <EUR=>, down 0.3 percent from
New York trading levels but above Monday's four-year low of
$1.1876. Against the yen, it fell 0.5 percent from late U.S.
levels to 109.05 yen <EURJPY=R> after gaining 0.5 percent on
Tuesday.
"The euro decline isn't over," said Marc Chandler, senior
strategist at Brown Brothers Harriman in New York. "What we're
seeing now is a brief respite. A rise above $1.20 would be a
good chance to sell."
The pound fell after Fitch urged Britain to cut its
deficit, the latest in a series of concerns expressed by rating
agencies about the state of government finances in Europe.
The warning followed credit downgrades of Greece, Spain and
Portugal in recent months, and fresh worries this week about
Hungary's ballooning deficit and banks' exposure to Eastern
Europe as a whole. []
Gold firmed, hovering within sight of a record above $1,250
an ounce struck the previous day, as investors looked for safe
havens from months of market turmoil.
"It is mainly the fear of another slide into recession
which is seeing demand for gold as a safe haven," said
Commerzbank analyst Daniel Briesemann.
Valuations of global equities have come down quickly in the
last several weeks, but analysts appear divided over whether
the market is bottoming out.
The uncertain global economic outlook could have an impact
on earnings forecasts, though economists as a whole have not
changed their growth predictions in a big way.
Asian investors are awaiting a flurry of data from China
this week after reports last month indicated growth may have
peaked in the world's third-largest economy.
Though the number of property sales in big Chinese cities
is decreasing, likely pointing to an easing in price pressures,
other indicators do not reflect a massive slowdown in the
world's fastest growing economy or its demand for imported
goods.
U.S. crude oil futures prices <CLc1> rose 50 cents or 0.7
percent to $72.49 a barrel after industry data showed U.S.
crude inventories fell more than expected last week. []
(Editing by Kim Coghill)
