* Surprise drop in U.S. Midwest manufacturing spooks
markets
* MSCI Asia share index softens after nearing 13-month high
* Wall St weighs on Nikkei as does continued yen strength
* Dollar hovers near year lows, oil futures edge down
By Charlotte Cooper
TOKYO, Oct 1 (Reuters) - Asian shares fell on Thursday
after a surprise drop in manufacturing in the U.S. heartland
cast doubts on the strength of a global recobvery, while the
dollar was on the back foot against higher-yielding currencies.
The MSCI index of Asian shares excluding Japan
<.MIAPJ0000PUS> slid 0.14 percent, backing further off a recent
13-month high despite more evidence that the region's
manufacturing activity continues to gather strength.
Japan's Nikkei average <> dropped 1.4 percent with
exporters such as electronics parts maker Kyocera Corp <6971.T>
sagging 2.6 percent on concerns that the yen's recent strength
may eat into their overseas profits. []
Many Japanese exporters have set their exchange rate
assumptions for the dollar at around 90-95 yen for the current
fiscal year to March but the greenback hit an eight-month low
at 88.23 yen this week and was holding at 89.80 <JPY=> on
Thursday.
"The dollar's exchange rate is still below 90 yen, so
market players are still wary about that," said Toshiyuki
Kanayama, a market analyst at Monex Inc.
Among other exporters, chip-tester maker Advantest <6857.T>
fell 5 percent while Honda Motor <7267.T> lost 2.5 percent.
An unexpected contraction in factory activity in the U.S.
Midwest and larger private-sector layoffs than had been
forecast sounded a dour note for the end of the third quarter,
sending shares on Wall Street lower on Wednesday. []
[]
The Dow Jones industrial average <> fell 0.31 percent,
the Standard & Poor's 500 Index <.SPX> slid 0.33 percent and
the Nasdaq Composite Index <> eased 0.08 percent, although
they all gained about 15 percent over the quarter.
South Korean shares were led lower by automakers such as
Hyundai Motor <005380.KS> ahead of September sales data, while
shipbuilders retreated amid deepening words that more orders
may be cancelled as world trade remains weak. Hyundai slumped
more than 7 percent.
"Ongoing foreign and institutional selling, accelerated
further by weak U.S. (manufacturing) data, are pressuring
markets," said Lee Sun-yeop, a market analyst at Shinhan
Investment Corporation.
The Korea Composite Stock Price Index <> shed 1.9
percent, outstripping a fall of 0.2 percent in Australian
stocks <>, where miners such as BHP Billiton Ltd <BHP.AX>
dropped 1 percent.
Markets in Shanghai and Hong Kong were shut for China's
National Day holidays.
DOLLAR DEFENSIVE
The dollar was again on the defensive, having fallen in the
previous session as investors shifted funds out of the
greenback and chased growth-linked currencies.
The Australian dollar <AUD=D4>, seen as a proxy for global
growth in the currency market, hit a 14-month high above
$1.8850, buoyed by expectations that domestic interest rates
will rise faster than other developed economies.
The dollar index <.DXY>, a measure of its performance
against six major currencies, fell on Wednesday and stood at
76.700 on Thursday, not far above a 13-month low set last
month.
U.S. crude futures <CLc1> fell below $70 a barrel, after a
jump of more than 5 percent the previous day on a drop in U.S.
gasoline inventories that hinted at rising demand in the
world's top oil consumer. [].
Gold steadied after the weaker dollar helped push the
precious metal above $1,000 an ounce the previous day. Spot
gold <XAU=> was at $1,006.30 an ounce, little changed from late
U.S. levels.
(Additional reporting by Masayuki Kitano and Rika Otsuka on
Tokyo, Jungyoun Park in Seoul and Denny Thomas in Sydney)
(Editing by Kim Coghill)
