* Asia stocks dip 0.6 pct, financials lead drop
* Dollar drifts higher, nudges oil and gold lower
* Australian, S.Korean swap rates drop after surge
By Eric Burroughs
HONG KONG, Oct 19 (Reuters) - Asian shares pulled further
away from 14-month peaks on Monday after disappointing earnings
from U.S. corporate bellwethers such as General Electric Co
<GE.N> spurred some investors to take profits.
The dollar edged up, thanks mainly to a retreat in the euro
as European policymakers voiced some concerns that the single
currency's surge is approaching levels that would damage the
euro zone's recovery. Eurogroup Chairman Jean-Claude Juncker
said he was concerned about a continuous euro rise.
[]
The U.S. currency's gains helped nudge gold and oil prices
lower, though activity was limited as investors focused on what
the next batch of quarterly earnings will say about how
companies are managing the recovery from the deepest global
recession in decades.
Some 135 of the companies in the S&P 500 will report
quarterly results this week, with the battered financial sector
expected to post the highest growth rate, according to Thomson
Reuters data. []
"What we're seeing is just profit-taking, with Wall
Street's Friday fall providing the excuse, along with a sense
that the market may have risen too far, too fast," said
Noritsugu Hirakawa, a strategist at Okasan Securities in Tokyo.
The benchmark MSCI index of Asia-Pacific shares outside
Japan <.MIAPJ0000PUS> slipped 0.6 percent, tracking a 0.8
percent drop in the S&P 500 <.SPX> on Friday, but was not far
from its 14-month peak hit on Thursday.
Asia ex-Japan shares remain among the top performers in the
world as the region has powered out of the recession the
strongest, while its major companies have benefitted from a
pick-up in demand for electronics.
The Thomson Reuters index of Asia ex-Japan shares
<.TRXFLDAXPU> slipped 0.7 percent.
CREDIT SPREADS TIGHTEN
The latest run higher in stocks has been accompanied by an
investor shift into Asian fixed-income and credit markets that
has pushed spreads tighter, prompting issuers to roll out new
bonds to take advantage of attractive funding levels.
The iTraxx credit derivatives index of top Asian companies
<ITAIG5Y=MP> was quoted at 96.7 basis points after shrinking
below the 100 basis points threshold last week for the first
time in 17 months, underscoring the strong demand for higher
yields.
In currencies, the euro slipped 0.2 percent to $1.4858
<EUR=> and shed 0.3 percent against the yen to 135.10 yen
<EURJPY=R>. The dollar index, a gauge of its performance
against six major currencies, rose 0.2 percent to 75.771
<.DXY>.
The dollar's slight rise put pressure on commodities. U.S.
crude oil prices were steady at $78.53 a barrel <CLc1> after
hitting a 12-month high of $79.05 in early trade, while gold
shed 10 cents an ounce to $1,050.70 <XAU=>.
Government bonds were mixed and swap rates fell in some
countries after having surged in Australia, New Zealand and
South Korea last week on expectations that their respective
central banks will be lifting interest rates in coming months.
The five-year Korean swap rate <KRWIRS> dipped 2 basis
points to 4.57 percent after reaching 4.60 percent on Friday, a
one-year high. The five-year Australian swap rate <AUDIRS>
dropped 8 basis points to 5.97 percent, off a one-year peak of
6.12 percent.
Reserve Bank of Australia Assistant Governor Philip Lowe
said that it was appropriate for the central bank to go back to
a more normal monetary policy setting, reinforcing expectations
another rate hike is coming in November. []
(Additional reporting by Elaine Lies in Tokyo)
(Editing by Kim Coghill)
