* Nikkei falls to 5-month low, MSCI ex-Japan hits 8-month
low
* Euro resumes fall, Korean won tumbles to 10-month low
* Crude below $70 on recovery worries
* Safe haven appeal boosts JGBs
(Repeats to more subscribers)
By Alex Richardson
SINGAPORE, May 25 (Reuters) - Asian stocks fell to
multi-month lows and the euro slipped on Tuesday on fears that
Europe's sovereign debt woes will trigger a renewed crisis in
the continent's banking sector.
Europe's fumbling response to a Greek debt crisis and
bulging deficits in other euro zone countries have unnerved
markets over the past six weeks, and the central bank takeover
of a small Spanish lender at the weekend stoked fears of a
wider meltdown.
"This situation with the Spanish bank makes investors
nervous because it raises suspicions that something else may be
smouldering behind the scenes," said Hiroichi Nishi, equity
division general manager at Nikko Cordial Securities in Tokyo.
Funding conditions for banks have also been tightening,
with firms in the United States increasingly reluctant to deal
with firms with large exposure to Europe.
"Investors are selling into every rally in the euro," said
Jonathan Cavenagh, currency strategist at Australia's Westpac.
"Worries about the euro debt crisis are showing signs of
spilling over to the banking sector with funding costs rising,
albeit from very low levels. All this will only see more demand
for U.S. dollars."
Japan's Nikkei average <> fell 2.4 percent, hitting
its lowest level in more than 5 months and only around 26
points above a key support level at 9,500. The index has fallen
around 16 percent from an 18-month high in early April. []
MSCI's broadest measure of Asia-Pacific shares outside of
Japan <.MIAPJ0000PUS> dived 2.9 percent to its lowest in 8
months.
Exporters exposed to the European market were heavy losers,
with camera maker Canon <7751.T> down 2.4 percent and rival
Nikon <7731.T> falling 5 percent.
In Seoul, where the benchmark index <> lost 3.6
percent also amid heightened tensions with North Korea, Hyundai
Motor <005380.KS> slid 5.4 percent as investors took the
opportunity to lock in gains from a rally last month. []
EURO SQUEEZE
The euro was under pressure as a recent short covering
bounce faded. Traders said with liquidity in the foreign
exchange market showing signs of drying up, investors were
likely to shelter in the relative safe haven of the dollar.
The euro <EUR=> slipped to $1.2315 from around $1.2376 late
in New York on Monday, when it lost more than 1.5 percent.
Against the yen, the euro <EURJPY=R> eased to around 111.00
from 111.78 on Monday, when it lost more than 1 percent. []
The South Korean won <KRW=> fell 4.5 percent to a 10-month
low against the dollar amid a sharp rise in tensions on the
peninsula after Seoul accused communist North Korea of sinking
one of its warships. [] [] []
The U.S. dollar and the Japanese yen <JPY=> tend to gain
when there is a spike in volatility and loss in risk appetite.
The dollar index <.DXY> was up 0.6 percent at 86.71.
The worries of a fresh financial crisis boosted the safe
haven appeal of gold and U.S. and Asian government debt, with
Japanese government bond futures rising to near a two-year high
on Tuesday. U.S. Treasury prices had risen on Monday.
June 10-year JGB futures <2JGBv1> were up 0.25 point at
140.40, not far from a two-year high of 140.61 hit late last
week. The benchmark 10-year yield <JP10YTN=JBTC> fell 2.5 basis
points to 1.225, near a five-month low of 1.220 percent. []
U.S. crude futures fell more than 1 percent to below $70 a
barrel, erasing the previous day's gains, on concerns the
European crisis will choke off the nascent economic recovery.
NYMEX crude for July delivery <CLc1> was down 72 cents at
$69.49. []
Gold weakened in Asia after a rally overnight. Spot gold
<XAU=> was bid at 1,190.44 an ounce by 0255 GMT versus
$1,194.95 an ounce at 1804 GMT. []
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