* Economic worries cool optimism over China stimulus plan
* Stocks down, U.S. crude near 1-1/2-yr low
* Shanghai, Hong Kong indexes drop less than other markets
* Yen edges up on investor caution, gains limited
(Repeats to more subscribers)
By Eric Burroughs
HONG KONG, Nov 11 (Reuters) - Asian stock markets and
commodities retreated on Tuesday while the yen pushed higher as
a souring economic outlook took some of the wind out of
investor hopes sparked by China's massive stimulus plan.
Stocks pulled back after shares of General Motors <GM.N>
sank to a 62-year low and brokerages forecast that Goldman
Sachs <GS.N> will post its first-ever quarterly loss, stirring
worries about the earnings damage to come as the global economy
faces a recession.
The bankruptcy of No. 2 U.S. electronics retailer Circuit
City <CCTYQ.PK> also dashed the previous day's optimism.
"Disappointment over U.S. markets' muted reaction to the
China economic stimulus package dampened investor appetite,
with technology exporters leading falls after the Circuit City
bankruptcy news," said Won Jong-hyuck, a market analyst at SK
Securities.
China's announcement that it was planning a nearly $600
billion package focusing on infrastructure, along with
expectations U.S. President-elect Barack Obama will push for
more fiscal spending, spurred investor risk-taking on Monday.
Investors have grappled with whether the drop in shares now
reflects enough the expected downturn in economic growth and
corporate earnings that drove the broad MSCI index of Asian
markets outside of Japan to a 4-1/2-year low last month.
The MSCI Asia ex-Japan <.MIAPJ0000PUS> fell 3.1 percent but
is still up about 24 percent from the low struck in October
when investors dumped assets across the board to raise cash,
hitting higher-yielding currencies and commodities as well.
Japan's Nikkei average <> shed 3.3 percent to 8,781.45
after having jumped nearly 6 percent the previous day.
The Shanghai Composite Index held up better than other
markets, dipping 0.3 percent after having posted its biggest
one-day gain since September on Monday. Hong Kong's Hang Seng
<> drifted down 0.5 percent.
Companies such as Japan's Hitachi Construction Machinery
<.6305.T> climbed for a second day on hopes that China's big
spending to help underpin its slowing economy would provide a
boon of new orders.
In commodities, U.S. crude oil prices <CLc1> fell $1.68 a
barrel to $60.73, back near a 1-1/2-year low struck last week.
The yen edged up slightly, gaining as market players cut
positions favouring higher-yielding currencies that tend to
perform better when stocks rise and investor appetite for risk
improves.
The dollar dipped 0.2 percent from late U.S. trade to 97.85
yen <JPY=>, while the euro was down 0.4 percent at 124.50 yen
<EURJPY=R>.
Activity in currencies was relatively muted compared with
the sharp swings seen in some higher-yielding currencies
against the yen over the past month.
With year-end approaching, market players said they were
bracing for more hedge fund selling to raise cash holdings and
prepare for investor redemptions.
The sharp sell-off across financial markets in October was
driven in part by funds selling assets to boost cash holdings,
especially with money markets remaining under such severe
stress.
"We are in a period in which foreign investors including
hedge funds prepare for their year-end and raise their cash
holdings," said Minoru Shioiri, chief manager of forex trading
at Mitsubishi UFJ Securities.
"The yen could rise further if there are more funds rushing
to liquidate positions, but the peak may have passed for now,"
Shioiri said.
Safe-haven bonds benefitted from the drop in stocks.
Japanese government bond futures <2JGBv1> edged up 0.30 point
to 137.50, while the gains pushed the benchmark 10-year
Japanese government bond yield <JP10YTN=JBTC> down a basis
point to 1.515 percent.
U.S. bond markets were closed for the Veterans Day holiday,
but U.S. stock markets will be open as normal.
(Editing by Kim Coghill)
