GLOBAL MARKETS-Asian shares fall, weak dollar dents exporters

                                
 * Drop in U.S. Midwest manufacturing undermines markets
                                
 * MSCI Asia share index falls after nearing 13-month high
                                
 * Banks weigh 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 negative news on U.S. jobs and manufacturing pointed to a
patchy recovery in the world's largest economy, and as dollar
weakness sparked concerns for exporters around the region.
                                
 In Europe, futures pointed to a flat open for shares at the
start of the final quarter of 2009, after posting their biggest
quarterly gain for nearly 10 years in the previous three
months.
                                
 The MSCI index of Asian shares excluding Japan
<.MIAPJ0000PUS>, which rose 22 percent last quarter, slid 0.5
percent. It has retreated from a recent 13-month high despite
signs across Asia that the region's manufacturing activity is
gathering strength on slowimg improving demand. [ID:nSP546135]
                                
 Japan's Nikkei average <.N225> dropped 1.5 percent to
two-month closing low with exporters such as Kyocera Corp
<6971.T> hurt by yen strength and banks, and as investor
sentiment was dampened by uncertainty over policies of the new
government.
                                
 Many Japanese exporters have set their exchange rate
assumptions for the dollar at around 90-95 yen for the fiscal
year to March but the greenback hit an eight-month low at 88.23
yen this week and stood at 90.00 <JPY=> on Thursday, fuelling
concerns about damage to overseas profits.
                                
 "While the dollar rose above 90 yen the other day, it looks
as if the trend for yen strength might still be in place," said
Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
                                
 Among exporters, chip-tester maker Advantest <6857.T> fell
5.8 percent. Bank shares, including Mitsubishi UFJ Financial
Group <8306.T>, lost ground over the financial services
minister's interest in introducing a moratorium on repayment of
principal on mortgages and bank loans to help small businesses.
[.T]
                                
 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. [.N]
[ID:nN30198553]
                                
 The Dow Jones industrial average <.DJI> fell 0.31 percent,
the Standard & Poor's 500 Index <.SPX> slid 0.33 percent and
the Nasdaq Composite Index <.IXIC> eased 0.08 percent, although
they all gained about 15 percent over the quarter. [.N]
                                
 Ahead of Friday's non-farm payrolls, which are important
for U.S. consumers' confidence and the strength of economic
recovery, personal income, spending, home sales and
manufacturing data are all due along with weekly jobless
claims.
                                
 South Korean shares were led lower by tech firms and
automakers such as Hyundai Motor <005380.KS> after the won hit
a one-year high against the dollar and fuelled concerns about
exporters' competitiveness.
                                
 "The stronger won has prompted worries about exporters.
Investors are growing more cautious about the fourth quarter
and next year's outlook," said James Song, an analyst at Daewoo
Securities.
                                
 Hyundai fell more than 9 percent. The Korea Composite Stock
Price Index <.KS11> shed 1.7 percent, outstripping a fall of
0.9 percent in Australian stocks <.AXJO>, where miners such as
BHP Billiton Ltd <BHP.AX> dropped 1.4 percent.
                                
 Markets in Shanghai and Hong Kong were shut for China's
National Day holidays.
                                
 DOLLAR DEFENSIVE
                                
 The dollar was on the defensive early, having fallen in the
previous session as investors shifted funds out of the
greenback and chased growth-linked currencies. [FRX/]
                                
 The Australian dollar <AUD=D4>, seen as a proxy for global
growth in the currency market, briefly hit a 14-month high at
$1.8860, buoyed by expectations that domestic interest rates
will rise faster than other developed economies.
                                
 But the greenback later got a lift against the euro, which
fell after European Economic and Monetary Affairs Commissioner
Joaquin Almunia said the Eurogroup would discuss the single
currency's appreciation to prepare its position for the G7.
                                
 And it recovered ground against the won and Taiwan dollar
after dealers said authorities had sold the Asian currencies.
                                
 The dollar index <.DXY>, a measure of its performance
against six major currencies, rose 0.5 percent, lifting further
above a 13-month low set last month. It has lost 5 percent
since the start of the year.
                                
 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. [O/R].
                                
 Gold steadied after the weaker dollar helped push the
precious metal above $1,000 an ounce the previous day. Spot
gold <XAU=> was at $1,004.20 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)