RPT-GLOBAL MARKETS-Asia shares falter on profit outlook; yen up

                                
 * Asian shares down 1.5 pct; Nikkei slumps on profit
worries
                                
 * Oil remains under pressure on doubts about global demand
                                
 * Safe-haven yen gains broadly; Japanese bond also higher
                                
 * Indian stocks set to surge on election outcome
 (Repeats to more subscribers)
                                
 By Rafael Nam
                                
 HONG KONG, May 18 (Reuters) - Asian shares fell on Monday
as concerns about slumping corporate profits and the
still-uncertain outlook for the global economy fueled a retreat
from recent highs, keeping the safe-haven yen broadly higher.
                                
 Shares of Panasonic <6752.T> slumped 7.8 percent after
forecasting a bigger-than-expected annual loss after the
market's close on Friday, while Australian mining shares such
as Rio Tinto <RIO.AX> retreated after a slump in oil and metal
prices.
                                
 The exception could be India, where the stock market is
expected to surge and the rupee <INR=IN> to strengthen past 49
per dollar on hopes that the clear election victory of the
ruling coalition on Saturday will lead to a strong and stable
government and boost economic reforms. [ID:nBOM86999]
                                
 The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> lost 1.5 percent as of 0250 GMT, while Japan's
Nikkei average <.N225> dropped 2.9 percent, with shares of
exporters under pressure as the yen advanced.
                                
 "Recent economic indicators show that the worsening of the
economy appears to have stopped, but now we need to see signs
of recovery or it'll be difficult for stocks to rise
decisively," said Yoku Ihara, manager at the investment
information department of Retela Crea Securities.
                                
 Investors are hoping that the global economy may have hit a
bottom, though the timing and potential strength of a recovery
are far from clear. The MSCI index has surged 53 percent from
its 2009 low on March 4 to its yearly high on May 11, but the
global equity rally has shown signs of losing steam in recent
days.
                                
 U.S. economic reports on Friday were comforting, showing
April consumer prices unchanged and industrial output declining
at a slower pace. [ID:nN15177430]
                                
 Confidence is improving among Japanese manufacturers,
according to a Reuters monthly poll, while U.S. consumers in
May were also were optimistic. [ID:nTKC003339]
                                
 On the other hand, recent weak outlooks from Asian blue
chips such as Panasonic and Sony <6758.T> and other signs of
weakness in Europe are not inspiring confidence.
                                
 Data on Friday showed euro zone economies shrank far more
than expected in the first quarter, with Germany posting its
worst performance since reunification, though analysts note the
first quarter may have marked the low point. [ID:nLF932259]
                                
 Most major indexes in Asia, including in South Korea
<.KS11> and Australia <.AXJO> fell more than 1 percent each on
Monday.
                                
 OIL UNDER PRESSURE
                                
 Growing investor caution is affecting riskier assets such
as oil, which slumped nearly 4 percent on Friday amid doubts
about the strength of global demand for energy.
                                
 Global energy forecasters have recently downgraded their
forecasts for global energy demand in 2009, with the
International Energy Agency saying the decline in oil
consumption in 2009 would be the steepest since 1981.
                                
 U.S. crude futures <CLc1> were flat at $56.31 a barrel.
                                
 Some investors are also worrying about inflation risks in
months ahead as governments and central banks spend trillions
of dollars to stimulate growth and prevent prices from dropping
too much.
                                
 Gold <XAU=> held close to a six-week high of $933.65 an
once hit on Friday, as investors sought a hedge against
inflation. The yellow metal trading at $929.65 during Asia
trade, compared with its notional close of $930.70 on Friday.
                                
 Investors are also switching to assets that tend to benefit
during volatile times.
                                
 "The yen in particular is drawing funds away from other
currencies including commodities-related units which had been
bought sharply before," said Yoshihisa Kanzaki, a trader at
Shinkin Central Bank.
                                
 The euro slid as low as 127.42 yen <EURJPY=R> on trading
platform EBS, down 0.8 percent from late New York trade on
Friday.
                                
 The dollar fell 0.5 percent to 94.75 yen <JPY=>, staying
near a two-month low of 94.55 yen struck earlier on EBS.
                                
 Currencies that benefit when investors are in a risk-taking
mood retreated. The Australian dollar fell 0.6 percent to
$0.7462 <AUD=D4> and dipped 0.7 percent to 70.79 yen
<AUDJPY=R>, its three-week low, according to Reuters data.
                                
 Regional bonds gained, with Japanese government bond
futures up 0.32 point to 137.36 <2JGBv1>.