* N.Korea test fires two short-range missile, report says
* Seoul shares hit, Asian shares falter on N.Korea tensions
* Dollar edges up; eyes on U.S. Treasury auction this week
* Oil retreats ahead of OPEC meeting on Thursday
By Rafael Nam
HONG KONG, May 26 (Reuters) - Asian shares fell on Tuesday
as a report of fresh missile tests by North Korea added to
market tensions at a time when investors are questioning if
they are too optimistic about the global economic outlook.
Seoul shares fell more than 2 percent and Tokyo slipped a
fifth of a percent after North Korea was roundly condemned for
raising international tensions following a nuclear test on
Monday.
A report that North Korea had fired more missiles on
Tuesday came after both Seoul and Tokyo markets had closed.
The dollar edged higher, but remained near a five-month low
hit last week against a basket of currencies, as profit-taking
hit higher-yielding currencies that had benefitted from hopes
the worst of the global economic crisis was now over.
European shares were set to fall as well, while other
assets seen as having a higher risk, including oil, retreated.
Asia has grown accustomed to Pyongyang's sabre-rattling so
analysts generally believe the market impact of the missile
tests will be short-lived.
But the tensions are occuring as optimism about the
strength and speed of a global economic recovery is being
replaced by some doubts.
"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.
Consumer sentiment figures from South Korea and
manufacturing data from Singapore on Tuesday added to recent
reports offering some signs that the first quarter marked the
trough of the global downturn. [] amd
[]
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.
Among the global data that could help determine the course
of markets this week is U.S. housing and consumer confidence.
The fresh market uncertainty followed a report from South
Korea's Yonhap news agency that North Korea was preparing to
launch more short-range missiles. []
It later reported that North Korea had test fired a
short-range missile, although both the Seoul and Tokyo stocks
markets had already closed. []
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> fell 0.5 percent as of 0651 GMT. A rally that
had taken the index up more than 50 percent from its yearly low
in early March to its 2009 high last week has stalled in the
past several sessions.
Japan's Nikkei average <> closed down 0.4 percent,
while Seoul shares <> pulled back 2.1 percent.
Most other indexes were lower, though Australia <>
rose 1.1 percent after Rio Tinto <RIO.AX> sparked gains in iron
ore miners after announcing a smaller-than-expected cut in iron
ore contract prices. []
OIL RETREATS
The dollar index <.DXY>, which measures the dollar's
against six major currencies, edged up 0.15 percent to 80.140,
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 during the financial crisis.
A test of whether investors 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 94.77 yen <JPY=>, down from 95.10 yen in late Asian
trade on Monday.
Crude <CLc1> retreated 70 cents to $60.97 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 against the oil industry in
Nigeria. []
