* Global stocks at two-year low on economic worries
* Japanese government bond futures soar to a 5-mth high
* Yen surges, euro tumbles as investors unwind carry trade
(Repeats to additional subscribers with no change to text)
By Tom Miles
HONG KONG, Sept 5 (Reuters) - Investors dumped euros and
shares on Friday as U.S. economic troubles made bets on growth
elsewhere look too risky, sending stocks to their lowest in two
years while triggering a surge in safe-haven government bonds.
The ratcheting up of fear followed a 3 percent sell-off on
Wall Street on Thursday, the steepest decline for more than two
months, prompted by an unexpected jump in jobless claims and
nervousness ahead of monthly jobs data on Friday.
[]
The renewed worries sent the yen soaring as investors
unwound carry trades, ditching bets in which they had borrowed
the Japanese currency to buy euros or high-yielding Australian
or New Zealand dollars.
"This is not a flight to quality, it is simply a flight,"
said Alan Ruskin, chief international strategist at RBS
Greenwich Capital.
"Gold for example has failed to benefit, cash is king --
even the greenback, warts and all, or the yen, zero rates and
all."
The euro hit a 13-month low of 150.60 yen before pulling
back to 152.30 yen <EURJPY=R>, having recorded a 3.6 percent
drop on Thursday -- its biggest one-day fall since the massive
carry-trade unwind in 1998.
"Everyone it seems is closing out positions," said a trader
at a Japanese trust bank. "Hedge funds are rapidly unwinding
carry trades, and Japanese institutional investors with assets
abroad are buying back the yen."
The Australian <AUDJPY=R> and New Zealand dollars
<NZDJPY=R> -- long the bellwethers of the carry trade -- sank
to two-year troughs against the Japanese currency.
SHARES SLIDE
The prospect of less competitive exports to Europe, as well
as growing gloom about the global economy, hit Japanese shares
such as Mizuho Financial Group <8411.T> and Sony Corp <6758.T>,
which fell 6.6 percent and 4.4 percent, respectively.
At 0400 GMT, Japan's Nikkei average <> was down 2.8
percent, after touching its lowest since March 19, while stocks
elsewhere in the Asia-Pacific, gauged by MSCI's index
<.MIAPJ0000PUS> were down 2.4 percent.
The MSCI All-Country World index <.MIWD00000PUS>, down 0.6
percent, plumbed its lowest level since August 2006.
Data during the day showed Japanese companies unexpectedly
cut capital spending in the second quarter, likely meaning the
economy contracted even more than previously estimated during
the April-June period. []
A VOLATILE RIDE
As investors dumped stocks, Japanese government bond
futures rose, reversing losses made in thin trade on Thursday.
September 10-year futures <2JGBv1> jumped 1.44 points to
138.94. The benchmark 10-year yield <JP10YTN=JBTC> fell 6 basis
points to 1.450 percent.
Analysts said 10-year yields would likely have a tough time
falling below their four-month low of 1.400 percent.
"Our view is that these are highly volatile markets going
nowhere," said John Richards, head of Asia economics and
strategy at RBS Securities. "With the central bank on hold and
the economy probably in a mild recession, we're stuck in this
situation."
The iTRAXX Asia ex-Japan high-yield index <ITAHY5Y=IE>, a
key measure of risk aversion, widened as much as 15 basis
points (bps) to 579, its biggest since early July at the height
of concerns over U.S. mortgage financing providers Fannie Mae
<FNM.N> and Freddie Mac <FRE.N>.
The equivalent investment-grade index <ITAIG5Y=IE> widened
by as much as 8 bps to 173. However, both indexes tightened by
a few basis points each later.
Growth fears rattled commodity markets, with Tokyo platinum
<0#JPL:> -- used in vehicle exhausts -- plunging by the daily
300 yen limit, or 6.1 percent, because of worries about weak
car sales, as well as dollar strength against the euro and weak
oil prices.
Gold <XAU=> dipped to $790 an ounce.
In Shanghai, copper <SCFX8> fell almost 2 percent to its
lowest in three weeks, while the London contract <MCU3>
continued Thursday's 1.6 percent slide in electronic trading.
U.S. crude oil <CLc1> held firm in Asian trade, having
fallen $1.46 to $107.89 a barrel in New York on Thursday,
extending a slide from an all-time peak of more than $147 in
mid-July.
(Additional reporting by Shinichi Saoshiro, Eric Burroughs and
Elaine Lies in TOKYO; Editing by Lincoln Feast)
