(Repeating to additional subscribers with no changes to text)
* Nervousness as N.Korea threatens more short-range
missiles
* Seoul shares hit, Asian shares flat on N.Korea tensions
* Dollar edges higher; U.S. Treasury auction this week eyed
* Oil retreats ahead of OPEC meeting on Thursday
By Rafael Nam
HONG KONG, May 26 (Reuters) - Asian shares edged lower on
Tuesday with stocks in Seoul down 1.2 percent after North Korea
threatened to launch more missiles and while investor doubts
about the world economy kept riskier assets such as the euro
under pressure.
North Korea further raised tensions after its nuclear test
on Monday, though analysts believe the market impact will be
short-lived in a region growing accustomed to Pyongyang's
actions. []
The dollar edged higher against major currencies, but not
too far off its recently hit lows for the year. U.S. Treasury
auctions this week will test the allure of dollar assets at a
time of growing worries about the country's deficits.
After strong gains in riskier plays such as emerging market
stocks over the past couple of months, investors are hesitating
over how much further to push the rally, given the doubts about
the strength or speed of any recovery.
The indecision was particularly evident as recent gainers
such as oil retreated amid a lack of driving factors after U.S.
and British markets were closed on Monday for a public holiday.
"As was the case with the nuclear test yesterday, news of
yet another North Korean missile launch would have a relatively
short-lived impact on markets. This will actually offer
opportunities to buyers to pick up stocks at lower prices,"
said Lee Kyoung-su, an analyst at Taurus Investment &
Securities.
"Market participants are more concerned with macroeconomic
factors, such as a batch of data from the United States due out
this week. More falls are expected if the data proves to be
disappointing," added the Seoul-based analyst.
Recent data from Seoul to Taipei is hinting that the first
quarter marked the worst in the biggest global economic crisis
since World War Two.
The pace of falls in global exports are slowing, industrial
output is improving, while consumer and business sentiment is
picking up. South Korea on Tuesday said its key consumer
sentiment rose to its highest in nearly two years in May.
[]
The question now is how soon, or fast, a recovery will take
shape. That is something that central bankers -- with Malaysia
holding a policy meeting later on Tuesday -- are grappling with
as they seek to determine whether to stop cutting interest
rates.
"The economies of both the United States and China aren't
just going to surge rapidly upwards, and what we're seeing
today is probably a bit of a reality check," said Koichi Ogawa,
chief portfolio manager at Daiwa SB Investments.
Among the global data that could help determine the course
of markets is U.S. housing and consumer confidence this week.
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> was down 0.25 percent as of 0334 GMT. A rally
that had taken the index up more than 50 percent from its
yearly low in early March to its 2009 high just last week has
stalled over the past several sessions.
Japan's Nikkei average <> lost 0.7 percent, while
Seoul shares pulled back 1.2 percent.
Other indexes were higher, but not by much. Taiwan <>
was the leading gauge with a 0.2 percent gain.
OIL RETREATS
The dollar index <.DXY>, a gauge of the greenback's
performance against six big currencies, edged up 0.17 percent
to 80.158, though that was not too far off a five-month trough
of 79.805 hit on Friday.
The U.S. currency was routed last week on fears that the
United States would lose its top AAA rating due to its widening
debt levels.
A test of whether investors, particularly China, are
willing to continue financing the U.S. deficit will come this
week when the U.S. Treasury sells $101 billion in U.S. Treasury
notes spread out from Tuesday through Thursday.
The euro <EUR=> remained under pressure on Tuesday, partly
due to profit-taking after a recent rally of about 8 percent in
a month against the dollar and after Germany's Ifo measure of
corporate sentiment rose by less than expected. []
The euro was last at $1.398 against the U.S. currency,
edging lower on the day, while against the yen the dollar
traded at 94.66 yen <JPY=>, down from 95.10 yen in late Asian
trade on Monday.
Crude <CLc1> retreated 74 cents to $60.94 a barrel ahead of
OPEC's meeting on Thursday that is expected to result in no
changes to oil supply. []
A recent rally in oil prices was dented last week amid
worries about attacks by militants agains the oil industry in
Nigeria. []
