GLOBAL MARKETS-Oil drops; earthquake hits Chinese shares

                                
  (Updates with latest prices, European stock pre-opening)
                                
 By Rafael Nam
                                
 HONG KONG, May 13 (Reuters) - Oil prices retreated from
recent records on Tuesday on monthly data showing a fall in
China's imports of the commodity, but Asian shares gained as
banks were bolstered by further signals the worst of the credit
crisis may now be over.
                                
 Overall trading was subdued, with the dollar edging higher
ahead of April U.S. retail sales data due out later in the day,
as well as a speech from Federal Reserve Chairman Ben Bernanke.
                                
 The earthquake on Monday that killed nearly 10,000 people
in southwest China hit shares in Shanghai <.SSEC> and weakened
the yuan currency. Still, it failed to have an impact elsewhere
in the region on as the economic fallout was seen limited.
                                
 Inflationary pressures from rising food and energy costs,
and further fallout from the global credit crisis, have been
among the most pressing concerns to investors in Asia this
year, and despite a more positive tone, little of that changed
on Tuesday.
                                
 Analysts attributed the fall in crude futures to
profit-taking after data on Monday showed a fall in China's oil
imports in April. The reduced demand was also seen as a one-off
adjustment after refiners had unusually high inventory.
                                
 "When news like the Chinese imports comes out, it makes
sense to take a profit. But is demand really killed or only
rationed? It will take a lot of damage to revise the overall
trend," said Tony Nunan, risk management executive at
Mitsubishi Corp in Tokyo.
                                
 Crude prices have gained around 15 percent this month alone
on the back of news about supply disruptions, having hit a
string of records that peaked at $126.40 a barrel on Monday.
                                
 Oil <CLc1> was down 78 cents at $123.45 a barrel at 0600
GMT, after earlier falling as low as $123.10.
                                
 The tone in stock markets was more positive. The MSCI's
index of Asian markets outside Japan <.MIAPJ0000PUS> rose 0.7
percent, taking its gains since hitting a mid-March low to
around 17 percent. The index is still down more than 7 percent
this year.
                                
 European shares were set for gains, tracking Asia's
performance, according to financial bookmakers. Britain's FTSE
<.FTSE> was set to open up 21-28 points.
                                
 CHINA HIT
                                
 The exception was China, where the benchmark stock index
<.SSEC> fell 1.5 percent on uncertainty following the deadly
earthquake, even though trading was suspended in shares of
companies in the affected Sichuan area. [ID:nSP273754]
                                
 Shares were also hit after the country announced on Monday
the fourth bank reserve ratio hike this year. [ID:nSP50787]
                                
 Insurance shares were particularly hit, with China Life
Insurance <601628.SS> down 5.3 percent.
                                
 "Overall, the impact of the earthquake on the markets
should be temporary, while the monetary tightening stance
should have much longer-term consequences," said economist Jin
Dehuan at Shanghai Securities and Futures Institute.
                                
 But the earthquake boosted shares in regional construction
material suppliers that could benefit from rebuilding efforts
such as cement makers Hebei Taihang Cement <600553.SS> and
Taipei-listed Asia Cement <1102.TW>.
                                
 SUBDUED TONE
                                
 Elsewhere, banks such as Mizuho Financial Group <8411.T>
were among the day's gainers after MBIA <MBI.N>, the world's
largest bond insurer, said its new business volumes appear to
be rising in the current quarter in a sector that has been a
key source of concern during the global credit crisis.
[ID:nN12201565]
                                
 Meanwhile, Europe's biggest bank, HSBC Holdings <HSBA.L>
<0005.HK> said its profit in the first quarter beat a year ago
as growth in Asia helped counter some $5 billion in hits from
bad debts on U.S. home loans and asset writedowns.
[ID:nL1269188]
                                
 Japan's Nikkei share average <.N225> rose 1.5 percent, with
Nikon Corp <7731.T> soaring 12.5 percent a day after the
precision equipment maker posted a surge in annual profit
thanks to sales of advanced cameras and chip-making equipment.
[ID:nT207717]
                                
 Taiwan's shares <.TWII> rose 1.8 percent, thanks to
companies expected to benefit from reconstruction efforts from
the earthquake in southern China.
                                
 Indexes in South Korea <.KS11> and India <.BSESN> gained
around 1 percent each. Singapore <.FTSTI> was up 0.7 percent.
                                
 Shares in Hong Kong <.HSI> rose 0.7 percent led by a 1.7
percent gain in HSBC following the update about its quarter.
Aluminum Corp of China Ltd <2600.HK> and online services
provider Tencent <0700.HK> also gained after they were included
into the blue chip index, as per the latest revision announced
on Friday.
                                
 Markets in Hong Kong and South Korea were closed on Monday
for a public holiday.
                                
 Australian shares <.AXJO> fell 0.2 percent as weaker
commodity prices pressured resource firms, though St George
Bank Ltd <SGB.AX> surged 25.5 percent on an $17.6 billion offer
from Westpac Banking Corp <WBC.AX>. [ID:nSYD40653]
                                
 Prices for other asset classes were more subdued, with the
dollar trading at 103.85 yen <JPY=>, up slightly from Monday.
                                
 Gold <XAU=> fell to $878.80/879.60 an ounce from
$884.60/884.20 late on Monday, as the halt in crude oil's climb
dented the appeal of the metal as a hedge against inflation.
 (Editing by Louise Heavens)