* Risk rally fades as investors get cautious again
* U.S. corporates push through heavy bond supply
* Oil climbs above $42 on bargain hunting
By Kevin Plumberg
HONG KONG, Jan 9 (Reuters) - Asian stocks slipped and the
U.S. dollar drifted higher on Friday, as investors braced for
the December U.S. payrolls data, expected to show sharp job
losses and deal another blow to hopes for a speedy recovery
this year.
The world's largest economy probably shed more than half a
million jobs last month, bringing job losses in 2008 to a
post-war record, boding ill for Asia's struggling exporters who
have been starved of demand from developed nations.
Global equities, emerging market currencies and high-grade
credit had all benefited in the last month from a steady
improvement in investors' risk tolerance. However, dour
corporate outlooks, including from the world's top retailer
Wal-Mart, and prospects for higher unemployment have curbed
appetite for riskier assets. []
"What gave the latest rally legs has been the support of
institutional investors. Now, as they are once more on the
sidelines there must be a danger that the gains will be
reversed," said analysts with State Street Global Markets in a
note.
"The message from investors is that even though the world
may not face an existential crisis, the wrecking ball of
deleveraging and unprecedented financial and economic
dislocation will cause further damage yet," said the analysts,
who track 15 percent of the world's tradeable assets.
The MSCI index of stocks in the Asia-Pacific region outside
Japan <.MIAPJ0000PUS> edged 0.5 percent lower, creeping further
away from a one-month high reached on Wednesday.
Japan's Nikkei share average <> fell 0.8 percent, with
big exporter stocks such as Honda Motor Co <7267.T> and Canon
Inc <7751.T> among the biggest drags on the index.
AGGRESSIVE ACTION
South Korean stocks were the region's biggest decliners,
with the benchmark KOSPI <> down 1.8 percent after the
country's central bank cut interest rates by 50 basis points to
a record low and warned Asia's fourth-largest economy would
slow further.
"The Bank of Korea has no choice but to cut interest rates,
given a slowing economy. The economy probably contracted in the
fourth quarter and the first quarter is seen worse," said Park
Sang-hyun, chief economist with HI Investment & Securities in
Seoul. []
Policymakers in China, India and Korea were the most
aggressive in Asia in trying to protect their economies as the
worsening global downturn really bit into the region in the
second half of 2008.
But other Asian countries have lately had to step up their
actions with export sectors gutted, domestic growth crippled
and bank lending still sluggish. Taiwan unexpectedly slashed
rates and Indonesia eased by more than forecast this week.
Bond market investors meanwhile have been more focussed on
new global bond issuance, hungry for higher yields,
particularly with credit markets showing signs of
stabilisation.
U.S. corporate debt proceeds of $19.9 billion in the first
full week of 2009 were the highest since May 2008, according to
Thomson Reuters data, as companies took advantage of the window
of calm in capital markets to push through deals.
The budding enthusiasm has slowly peeled money away from
U.S. Treasuries. The benchmark 10-year Treasury note yield
<US10YT=RR> was steady at 2.45 percent, but has climbed around
40 basis points since hitting a five-decade low late in 2008.
The 30-year bond yield edged up to 3.04 percent
<US30YT=RR>, up 1 basis point from late New York trade.
Japanese government bond futures <2JGBv1> ticked up 0.28
point after hitting a 1-month low on Thursday.
The dollar was little changed at 91.15 yen <JPY=>. The
dollar had hit a one-month high around 94.65 yen on Tuesday.
The euro fell 0.2 percent to $1.3677 <EUR=>. The euro has
bounced between $1.3964 and a three-week low of $1.3312 this
week.
U.S. light crude oil for February delivery <CLc1> climbed
above $42 a barrel, up 2 percent, as dealers tried to find a
floor, thinking most of the bad news has been priced in.
