* Stocks slip on profit-taking but set for strong month
* Yen clings near post-intervention high, market wary
* China-linked shares on Nikkei hit by spat over islets
By Elaine Lies
TOKYO, Sept 24 (Reuters) - Asian stocks fell back from
recent five-month highs on Friday, hit by profit-taking fed by
renewed worries over the global recovery, while the yen clung
close to its highest since Japan's currency intervention last
week.
The spectre of more monetary easing by the Federal Reserve
and falling U.S. yields put renewed pressure on the dollar,
while the euro also slipped as fresh worries about Ireland's
economy and banks raised more doubts about the euro zone's
prospects.
But Asian shares ex-Japan appeared poised for their
strongest monthly performance in roughly a year, while even
Japan's Nikkei average -- a global laggard -- is seen likely to
have its best monthly performance in six months, bolstered by a
renewed interest in the region that has sent funds flowing its
way.
"I think many market players are looking for chances to
book profits if there is any rebound," said Kiyoshi Noda, chief
fund manager for MU Investments in Tokyo.
"There are persistent concerns about the U.S. economy, and
unless that situation improves it is hard to think that there
will be a big shift in the overall trend."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Yuan showdown with Washington?
http://r.reuters.com/haz94p
Eye on yen intervention:
http://r.reuters.com/zuz33p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
U.S. shares slumped on Thursday, hit by a
worse-than-expected rise in initial unemployment claims and a
sluggish rise in sales of previously owned homes, with the S&P
500 <.SPX> falling below a key technical level to support the
views of those who had thought the recent rally was flimsy.
The malaise continued in Asia, with the MSCI index of
Asia-Pacific shares ex-Japan <.MIAPJ0000PUS> down 0.4 percent,
falling back from a five-month high touched earlier this week,
with materials and tech shares taking some of the biggest hits.
Markets in China, Japan, Hong Kong and South Korea were
closed on Thursday. Japan's benchmark Nikkei <> shed 1.3
percent to 9,446.71. []
Shares of Japanese companies with strong exposure to China,
such as Komatsu <6301.T> and Hitachi Construction Machinery
<6305.T>, remained under pressure as a row between Japan and
China over ownership of islets in the East China Sea dragged
on. []
Australian shares <> lost 0.8 percent.
But according to EPFR Global data, Asia ex-Japan Equity
Funds had their best week in over 15 months in the week ending
Sept. 22, while Japan Equity Funds snapped a 12-week outflow
streak.
The run was due, it said, to strong regional growth and the
generally good fiscal profile of key markets.
YEN WARINESS REIGNS
The MSCI world stock index <.MIWD00000PUS> slipped 0.2
percent.
The dollar traded at 84.52 yen <JPY=>, up 0.2 percent from
late U.S. levels, but not far from the post-intervention low of
84.26 hit on Thursday, and market players remained on guard
about the chance of more such action.
"There hasn't been any intervention even after the dollar
fell below 85 yen, which some in the market have thought could
be the line in the sand. That may lead to speculation that
Japan's real defence line is around 82-83 yen," said Keiji
Matsumoto, a strategist at Nikko Cordial Securities.
"Nonetheless, many market players will remain wary of
intervention for now after their huge intervention."
Japan intervened on Sept. 15 minutes after the dollar hit a
15-year low of 82.87 yen, selling an estimated 2 trillion yen
($23.70 billion), its largest single-day yen selling
intervention. Also pressuring the dollar are shrinking yield
gaps between the dollar and the yen.
The two-year bond yield spread fell to around 29 basis
points, the lowest in nearly two years, as expectations that
the Federal Reserve will adopt quantitative easing brought U.S.
bond yields closer to Japanese yields.
Spot gold <XAU=> held steady and was heading for a 1.5
percent rise from a week earlier.
($1=84.37 Yen)
(Additional reporting by Masayuki Kitano and Hideyuki Sano;
Editing by Alex Richardson)
