* Fed chairman says U.S. outlook "unusually uncertain"
* Bernanke does not specify any policy action
* Nikkei index posts fifth straight day of declines
* Yen near 7-1/2-month high vs dollar on risk aversion
(Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, July 22 (Reuters) - The yen neared a 7-1/2-month
high and Asian stocks slid on Thursday after comments by the
head of the Federal Reserve added to concerns about the U.S.
economy, causing investors to dump riskier assets ahead of
European bank stress test results.
Major European stock markets were expected to open as much
as 1.2 percent lower, financial bookmakers said, after Fed
Chairman Ben Bernanke described the U.S. outlook as "unusually
uncertain" but gave no indication that specific actions to deal
with it are imminent. []
The conclusion of the European Union examination of banks'
financial strength is due on Friday and is expected to show
generally positive results for Greece, Italy and Ireland and a
few failures in Portugal and Spain. []
However, if investors perceive the test results as
credible, do not expect risk-taking to bounce back for long,
given that Europe's fundamental backdrop remains relatively
grim, especially with fiscal austerity the norm, U.S. fund
managers and analysts said. []
For more coverage of Europe's stress tests, click on:
[]
Meantime, Bernanke's somewhat downbeat comments and lack of
any policy action triggered more profit taking.
"Those who had expected more were disappointed after
Bernanke only said the Fed stands ready to ease monetary policy
further," said Hiroichi Nishi, general manager of equity
marketing at Nikko Cordial Securities in Tokyo.
Japan's Nikkei share average <> finished down 0.6
percent, its fifth straight session of losses. The Nikkei has
fallen 1.7 percent so far in July, underperforming the S&P 500
<.SPX>, which is up 3.8 percent, and the FTSEurofirst 300
<>, which has risen 2.5 percent.
Short-term indicators pointed to oversold conditions,
though persistent yen strength has dominated equity trading
lately. As long as currency dealers keep knocking the dollar
back toward 85 yen per dollar, roughly the low from November
2009, Japanese equities could be under pressure.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> slid 0.7 percent, with healthcare and
technology stocks the main drags.
The tech sector was weighed down after South Korea's Hynix
Semiconductor, the world's No. 2 memory chip maker, said DRAM
prices would fall in the current quarter, even though shipments
were expected to grow. Hynix shares <000660.KS> fell 4.2
percent.
Dow Jones Industrial Average components 3M Co <MMM.N> and
Caterpillar <CAT.N> will be among the more closely watched
earnings reports later in the day as investors look for more
clues on the global growth outlook.
So far 80 percent of the S&P 500 companies that have posted
second-quarter earnings have either met or beat estimates.
However, with fears rife about a slowing global economy,
third-quarter earnings forecasts for companies that have not
yet reported have already been cut by 1 percent, Thomson
Reuters Starmine showed.
YEN GAINS
The yen rose across the board, benefiting from the
increased risk aversion in financial markets. The U.S. dollar
fell 0.5 percent to 86.48 yen <JPY=>, closing in on the
7-1/2-month low hit last week of 86.27 yen.
Japanese policymakers have been trying to talk the yen
lower, fearing the country's exporters would be hurt. Deputy
Finance Minister Motohisa Ikeda said on Thursday that Japan
wants to avoid excessive rises in the yen, but market reaction
was muted. []
However, traders appeared intent on testing what many
believe to be the line in the sand at 85 yen per dollar, beyond
which they expect Japan would take action to defend.
The yen has already risen more than 7 percent against the
dollar so far this year.
MORE BERNANKE
Long maturity U.S. Treasuries crept higher, pushing down
the 10-year yield to 2.88 percent, not far from the 15-month
low of 2.86 percent hit overnight. The 2-year yield <US2YT=RR>
was at a record low of 0.56 percent.
U.S. economic data due later on Thursday are expected to
show persistent weakness in labour and housing markets -- sore
points for investors that exacerbate a shift out of risky
assets. Investors were also awaiting Bernanke's second day of
testimony to Congress (starting at 1330 GMT).
"Bernanke is testifying again, and focus will be on whether
he gives any extra hint of potential Fed action if the economy
continues to soften. Lack of such suggestion on a day of poor
data releases would further strain investors' nerves," Dariusz
Kowalczyk, senior economist with Credit Agricole CIB in Hong
Kong, said in a note.
U.S. crude futures eased 0.4 percent to $76.29 a barrel
<CLc1> after dropping 1.3 percent on Wednesday on Bernanke's
comments.
Gold prices fell 0.8 percent, bringing month-to-date losses
to 4.7 percent. The metal was roughly $10 away from a two-month
low hit on Tuesday and could test that level soon, with
investors cutting gold positions to cover losses in other
markets.
(Additional reporting by Aiko Hayashi in TOKYO)
(Editing by Kim Coghill)
