* Nikkei falls 1.1 percent, MSCI Asia ex-Japan down 0.1
percent
* Silver hits record high $38.72 an ounce
* Euro eases to $1.4195, just below 120 yen
* Brent crude hovers $121 a barrel, adds to inflation
worries
By Alex Richardson
SINGAPORE, April 5 (Reuters) - Base and precious metals
prices rose and oil hovered near two-and-a-half year highs on
Tuesday, dragging on Asian shares as investors worried rising
commodities prices could erode corporate profit margins.
The euro edged off a five-month high against the dollar,
with traders saying a widely expected euro zone interest rate
rise later this week was already factored in.
Asian stocks fell, although shares in resources companies
bucked the trend, but higher commodities prices also stoked
worries about global inflationary pressures, pushing silver to a
31-year high.
Major European equity markets were seen opening flat,
financial bookmakers said, while S&P 500 futures <SPc1> were
down 0.2 percent, pointing to a weaker start on Wall Street.
The European Central Bank is seen as certain to bump up on
Thursday its key interest rate by 25 basis points from a record
low 1 percent to curb price pressures, with investors expecting
further tightening before the end of the year .
"For the ECB, an April interest rate hike is a done deal and
one or two more hikes are priced in," said Masafumi Yamamoto,
chief FX strategist at Barclays Bank.
A euro zone rate rise will widen the yield advantage enjoyed
by the single currency over the dollar, against which it has
appreciated more than 6 percent so far this year.
The Federal Reserve's intentions appear more finely judged,
and investors will keenly parse the minutes of its last meeting,
due later in the day, for signals on the timing of the U.S.
central bank's exit from its current ultra-loose policy stance.
Fed Chairman Ben Bernanke said in a speech that a recent
increase in U.S. inflation was driven primarily by commodity
prices and unlikely to persist, although he added that the Fed
would monitor inflation expectations very closely.
[]
The euro sat around $1.4195 , off a five-month high of
$1.4268 reached on Monday. The single currency was up a touch
around 119.75 yen , after breaching 120 yen on Monday
for the first time in nearly a year.
The dollar rose 0.3 percent to 84.35 yen , edging
closer to a six-month peak of 84.735 yen set on Friday.
SHARES DOWN
Japan's Nikkei share average fell 1.1 percent with
investors still unsure of the long-term impact of last month's
massive earthquake and tsunami and a resulting nuclear accident
that workers are still struggling to contain.
The Tokyo market has recouped about two-thirds of its plunge
in the days immediately following the disaster, but remains
around 6 percent below its close on March 11, the day the quake
struck northeastern Japan.
"There was a sharp drop in the Nikkei and we've seen a swift
rebound," said Norihiro Fujito, senior investment strategist at
Mitsubishi UFJ Morgan Stanley Securities.
"That's normal. But from now on people will start pricing in
fundamentals and that will push the market gradually lower, so
we'll see more moves like today in the coming weeks."
MSCI's broadest measure of Asia Pacific shares outside Japan
was little changed, with its materials sub-index
, which rose 0.4 percent, the only component in
positive territory.
Australia's resource-heavy benchmark index gained
rose 0.3 percent to a six-week high, while South Korean stocks
shrugged off early weakness to end up 0.7 percent at a
new record high as foreign investors snapped up shares in Seoul
for a 15th consecutive session.
Markets in China, Hong Kong and Taiwan were closed for
holidays.
U.S. stocks finished flat on Monday, with the volume of
shares traded at its lowest this year.
After the closing bell on Wall Street, Texas Instruments Inc
said it planned to buy smaller rival National
Semiconductor for about $6.5 billion in one of the
microchip industry's largest deals in years, but news of the
deal did little to lift Asian tech shares. []
U.S. crude futures <CLc1> inched down 0.3 percent to $108.19
a barrel, while Brent crude <LCOc1> was little changed at just
under $121 a barrel.
Brent surged more than $2 on Monday as Nigerian election
delays and a short-lived strike in Gabon added to the supply
jitters of a market already on edge over fighting in Libya and
unrest in Yemen, which borders top producer Saudi Arabia.
Silver rose to $38.72 an ounce, its highest since
early 1980, while gold was little changed around
$1,436.70 an ounce.
Base metals rose by 0.4 percent on average, led by copper,
with three-month copper on the London Metal Exchange up
$79 to $9,409 a tonne.
"The expectation of growing consumption globally, as well as
the supply picture, will lend strong support for copper prices,"
Liu Xiangming, vice president and executive director of Aluminum
Corporation of China (Chinalco), said at the Asia Mining
Conference in Singapore.
(Additional reporting by Richard Leong in HONG KONG; Editing by
Clarence Fernandez & Kim Coghill)
