By Rafael Nam
HONG KONG, Sept 4 (Reuters) - Asian shares fell to new
two-year lows on Thursday as further signs of a slowing global
economy -- from the euro zone to Japan -- hit sectors, such as
technology, that rely on exports.
The euro traded near an eight-month low against the dollar
as investors trimmed their positions ahead of the European
Central Bank's interest rate decision later.
Oil prices fell on concerns over weakening global demand.
Crude fell further below $109 a barrel despite Hurricane Ike
strengthening on its way towards the southeast U.S. coast.
[]
"It's hard for people to buy today, given the general mood
and the weakness of the tech sector overseas," said Hideyuki
Ishiguro, supervisor at the Investment Strategy Division of
Okasan Securities in Japan.
"There's also a wait-and-see mood developing among
investors ahead of U.S. jobs data due out tomorrow," he added.
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> fell at one point to its lowest since November
2006, and was down 0.2 percent as of 0225 GMT.
The concerns over a U.S.-led global economic slowdown were
reinforced after data on Wednesday showed falling investment
and private consumption led to the first ever quarterly
contraction in the euro zone economy from April to June.
[]
That weakness is coming as other major economies, such as
Japan, are also showing signs of struggling. []
Tokyo's Nikkei index <> fell 0.4 percent, weighed down
by Advantest Corp <6857.T> and other technology shares.
Other major indexes in the region fell, with Singapore
<.FTSTI> down 1.5 percent. Markets in Hong Kong <>,
Shanghai <>, Taiwan <> and Australia <> were
down around 1 percent each.
But South Korea's KOSPI <> rose 0.3 percent,
rebounding for a second day after dropping this week to an
18-month low on the back of fears of a capital flight out of
the country.
JGB BONDS TUMBLE
The European Central Bank is widely expected to leave
interest rates at 4.25 percent on Thursday, given its concerns
over inflation, and it is also expected to issue a new set of
staff economic projections. []
The euro rose around 0.1 percent from late U.S. trading on
Wednesday to $1.4514 <EUR=>, but is still near the eight-month
low of $1.4385 against the dollar the prior day.
"Everyone's thoughts are based on the process of
elimination. Market players are not focusing as much on the
United States, but instead are looking at economic conditions
in places like Europe and Australia," said a trader for a
European bank in Japan.
"It is not as if the dollar is strong," he said.
The attention in currency markets was also on the South
Korean won <KRW=>, which surged 1.6 percent to 1,130.0 per
dollar at one point on Thursday, as several dealers reported
authorities selling dollars to lift the local currency.
The won has been under siege this week -- down nearly 6
percent over the past four sessions -- on fears a possible mass
capital flight could put the South Korean financial system in
danger.
But if there is one relief for investors on the inflation
front is the drop in oil prices, which are now far below the
record above $147 hit in July.
U.S. crude <CLc1> dipped 21 cents to $109.14 on Thursday
amid expectations for slowing global demand and signs the U.S.
oil sector would recover quickly from Hurricane Gustav, which
had a less devastating effect on the U.S. Gulf coast than
feared.
Though economic uncertainty usually lift bonds, due to
their perception as a safe haven, Japanese government bond
futures tumbled on Thursday with traders citing selling by
foreign funds in a move exaggerated by thin trade.
September 10-year futures plunged as much as 0.93 point to
137.42 <2JGBv1> as traders suspect that hedge funds sold a
large amount of futures abruptly, possibly doe to the lead
contract's roll next week.
