GLOBAL MARKETS-Global econ fears send Asian stocks to 2-yr lows

                                
   * Asian stocks drop on weak U.S., euro zone economic
reports
                                
* Euro steady ahead of European Central Bank decision
                                
* Oil dips even as new hurricane approaches U.S. southeast
                                
* JGBs slump on foreign selling, but trading thin
 (Updates with latest Asian prices, European outlook)
                                
 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 United States to the euro zone -- hit
export-dependent sectors such as technology.
                                
 The dollar held steady at near an eight-month high against
the euro ahead of the European Central Bank's (ECB) meeting
later in the day, which is widely expected to result in no
changes to interest rates. [ID:nL3149788]
                                
 Concerns that earlier this year had centred in the United
States are now expanding to other regions as well, contributing
to the recent rebound of the dollar against other currencies.
                                
 Shifting expectations for global interest rates are playing
a role as well. Investors are betting the ECB will cut rates
later this year or next year, in contrast to the U.S. Federal
Reserve, which is set to tighten monetary policy over 2009.
                                
 The steep rebound in the dollar, plus concerns over
weakening global demand, have also hit oil prices, with crude
dipping toward $109 a barrel even as Hurricane Ike strengthened
into an extremely dangerous Category 4 on its way towards the
southeast U.S. coast. [ID:nN0369339]
                                
 "Economic conditions are worsening in countries other than
those of the dollar and the degree of their deterioration is
becoming clearer and clearer," said Mitsuru Sahara, senior
manager of foreign exchange sales for Bank of Tokyo-Mitsubishi
UFJ.
                                
 The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> fell at one point to its lowest since November
2006, and was down 1.1 percent as of 0600 GMT.
                                
 But European shares were set for a flatter open ahead of
the ECB's meeting.
                                
 The concerns over global economic growth were reinforced
after euro zone data on Wednesday showed falling investment and
private consumption led to the first ever quarterly contraction
from April to June. [ID:nL3419416]
                                
 The outlook in the United States remains weak as well, with
the Fed's latest Beige book report showing economic activity
was slow in August. [ID:nN03268855]
                                
 Asia is struggling as well, with major economies such as
Japan believed to be at or near a recession. [ID:nL3694818]
                                
 Tokyo's Nikkei index <.N225> fell 1 percent, weighed down
by Advantest Corp <6857.T> and other technology shares.
                                
 Other major indexes in the region fell, with Taiwan <.TWII>
sliding 2.6 percent, Singapore <.FTSTI> down 1.9 percent, and
India <.BSESN> down 1.4 percent.
                                
 Markets in Hong Kong <.HSI> and Shanghai <.SSEC> were down
less than 1 percent each.
                                
 JGB BONDS TUMBLE
                                
 The ECB is widely expected to leave interest rates at 4.25
percent on Thursday, given its concerns over inflation, though
it is also expected to issue a new set of staff economic
projections. [ID:nL3149788]
                                
 The euro held steady at $1.4490 <EUR=> against the dollar
ahead of the meeting, near an eight-month low of $1.4385 the
prior day.
                                
 The attention in currency markets was also on the besieged
South Korean won <KRW=>, which surged nearly 2 percent to
1,128.6 per dollar to snap a four-day losing streak, as several
dealers reported authorities selling dollars to lift the local
currency.
                                
 The won had dropped nearly 6 percent over the past four
sessions -- on fears a possible mass capital flight could put
the country's 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 18 cents to $109.18 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 this week.
                                
 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 1.02 point to
137.33 <2JGBv1>, and was last at 137.50, as traders suspect
that hedge funds sold a large amount of futures abruptly,
possibly doe to the lead contract's roll next week.
 (Editing by Lincoln Feast)