* Risk rally fades as investors get cautious again
* U.S. corporates push through heavy bond supply
* Oil climbs above $42 on bargain hunting
(Updates prices, adds quote, European outlook)
By Kevin Plumberg
HONG KONG, Jan 9 (Reuters) - Asian stocks edged down 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 dash hopes for a speedy recovery this year.
Major European stock markets were expected to open as much
as 1 percent higher, according to financial bookmakers, after
Citigroup <C.N> agreed to support legislation that would let
troubled borrowers save their homes through bankruptcy.
Analysts predict 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. []
"Market watchers are already prepared for bad news on the
jobs front. They expect unemployment to have risen to 7 percent
in December," said Linus Yip, strategist with First Shanghai
Securities in Hong Kong. "But the real test is in how Wall
Street will react to the news tonight."
The MSCI index of stocks in the Asia-Pacific region outside
Japan <.MIAPJ0000PUS> inched down 0.2 percent, creeping further
away from a one-month high reached on Wednesday.
Japan's Nikkei share average <> finished 0.45 percent
lower, with big exporters such as Honda Motor Co <7267.T> and
Canon Inc <7751.T> among the biggest drags on the index.
The scandal surrounding Indian IT company Satyam Computer
Services <SATY.BO> sparked fears foreign investors may pull out
of the country, especially so soon after attacks that paralysed
Mumbai late last year. [] The chairman of the
company resigned on Wednesday after saying that 94 percent of
the cash and bank balances on the company's book at the end of
September did not exist.
The BSE index <> was down 2 percent, and Satyam's
stock was savaged, falling 50 percent.
NO CHOICE BUT CUT
South Korean stocks tied with Indian equities as the
region's biggest decliners, with the benchmark KOSPI <>
also down 2 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 central banks 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 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.
The cost of insuring investment-grade bonds against default
or restructuring in Asia ticked up but remained much lower as
investors bet massive fiscal stimulus plans and rock-bottom
interest rates will eventually help global growth.
[]
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 2.44 percent, but has climbed around
40 basis points since hitting a five-decade low late in 2008.
The 30-year bond yield was at 3.04 percent <US30YT=RR>.
Japanese government bond futures <2JGBv1> ticked up 0.2
point after hitting a 1-month low on Thursday.
The dollar was little changed at 91.15 yen <JPY=>. The
dollar hit a one-month high around 94.65 yen on Tuesday.
The euro fell 0.3 percent to $1.3660 <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 1.4 percent, as dealers tried to find a
floor, thinking most of the bad news has been priced in.
