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* Stocks down 0.9%, drugmakers up and airlines down again
* Moves limited, investors assess potential flu econ damage
* Aussie and kiwi hit 1-mth low vs yen as risky positions
cut
By Eric Burroughs
HONG KONG, April 28 (Reuters) - Asian stocks slipped for a
second day on Tuesday on worries about the potential economic
fallout from the swine virus outbreak, even as investor
reaction reamined limited due to uncertainty about the full
impact.
More countries have reported cases of the flu, and
countries such as Australia and South Korea were testing for
the virus. The World Health Organization raised its alert level
to be a step closer to declaring the first flu pandemic in 40
years.
But so far the deaths have not spread beyond Mexico, where
the outbreak began and 149 people were killed. []
Companies such as drugmakers and producers of face masks
got a boost on an expected increase in demand, while airlines
extended losses on worries the swine flu will cause a sharp
reduction in travel around the world.
Japan's Chugai Pharmaceutical <4519.T>, maker of influenza
drug Tamiflu, rose 4.3 percent. Hong Kong's Cathay Pacific
Airways <0293.HK> dropped 2.3 percent.
Market players cut back on holdings of riskier
higher-yielding currencies and commodities for a second day,
taking profits on winning bets since the beginning of March
that a global economic recovery was taking root.
"Active trade is limited as the market is trying to grasp
how much swine flu could impact the global economy. We had
finally begun to see a bottom for the global economy and that
has been now ruined by pigs," said Tsuyoshi Segawa, equity
strategist at Shinko Securities.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> fell 0.9 percent, broadly in line with U.S.
shares after the S&P 500 <.SPX> shed 1.1 percent on Monday.
The MSCI benchmark for Asia is still up 28 percent from a
five-year low hit in early March.
AUSSIE AND KIWI EXTEND SLIDE
The Australian and New Zealand dollars -- still among the
highest-yielding of major currencies -- hit one-month lows
against the yen as investors cut back on traditional plays
favouring carry trades that were in vogue as stocks rallied.
The Aussie was down 1.1 percent against the yen at 67.77
yen <AUDJPY=R> and shed 0.8 percent against the dollar to
$0.7034 <AUD=D4>.
Between early February and mid April, the Aussie had surged
more than 30 percent against the yen as carry trades -- using
low-yielding currencies as a cheap source of funds to buy
higher-yielding currencies -- came back into favour.
The Aussie's correlation has been strengthening against key
stock markets over the past few weeks, suggesting that
investors have been cutting positions at the same time across
markets.
The dollar edged up slightly as investors favoured the U.S.
currency as a haven while shedding holdings of riskier assets.
The dollar index, a gauge of its performance against six
major currencies, inched up 0.1 percent to 85.725 after having
jumped 1.1 percent on Monday -- the biggest daily gain in a
month.
The dollar's gains pushed gold prices lower and triggered
stop-loss selling of bullion, traders said. Gold was down $7.20
an ounce at $899.55 <XAU=>. U.S. crude oil <CLc1> shed 56 cents
to $49.58.
Government bonds were mixed. Japanese government bond
futures <2JGBv1> rose 0.26 point, while U.S. Treasuries
slipped. Benchmark 10-year Treasury notes <US10YT=RR> were down
4/32 in price to yield 2.923 percent, up a basis point from
late U.S. trade.
(Additional reporting by Aiko Hayashi in Tokyo; Editing by Jan
Dahinten)
