* Asia shares slide as data raises concern about US
recovery
* Markets brace for U.S. non-farm payrolls report
* Dollar firm, favoured over high-yield currencies
* Japanese govt bonds hit 6-month high as stocks tumble
(Repeats to more subscribers)
By Susan Fenton
HONG KONG, Oct 2 (Reuters) - Asian shares fell on Friday as
disappointing U.S. manufacturing data raised concerns that its
economic recovery may not be as fast as previously thought,
while the dollar remained firm as investors booked profits on
higher-yielding currencies.
Shares in Japan <> slumped 2.5 percent as the weak
U.S. data and concerns that a strengthening yen <JPY=> will
hurt exporters unnerved investors, who shrugged off a surprise
drop in Japanese unemployment.
As stocks tumbled, Japanese government bond futures hit
their highest levels in six months.
Across the region, investors were rattled by an Institute
for Supply Management report showing U.S. manufacturing growth
was slower-than-expected in September, which helped push the
Dow Jones average <.DJIA> down 2.1 percent, its worst one-day
fall in three months. [],
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> fell 1.8 percent, while the Thomson Reuters
index for regional shares <.TRXFLDAXPU> was down 1.4 percent.
China, India and South Korean markets were closed for public
holidays.
Markets are now keenly awaiting U.S. non-farm payrolls data
due later on Friday for further clues on the strength of U.S.
economic recovery.
A report on Thursday showed initial claims for state
unemployment insurance rose last week, overshadowing other data
showing U.S. consumer spending rose at its fastest level in
nearly 8 years in August. []
David Watt, senior currency strategist, at RBC Capital in
Australia said the September U.S. manufacturing index played to
the theme that, without aggressive stimulus from governments
and polictmakers, "the formerly red-hot recovery is going stone
cold."
Adding to investor concern was data showing U.S. car sales
slumped 23 percent last month after the end of the government's
"cash for clunkers" programme, which had briefly boosted
vehicle sales. []
Japanese car makers were hurt by the drop in U.S. car
sales with Toyota Motor <7203.T> sliding 2.9 percent and Nissan
Motor <7201.T> was down 4 percent.
Australia's benchmark S&P/ASX 200 index <> was down 2
percent as investors reassessed recent gains. Mining giants BHP
Billiton <BHP.AX> and Rio Tinto <RIO.AX> lost close to 3
percent each struggled after metal and gold prices fell on
concerns about weak demand.
"When the market has risen 50 percent without pause, there
is far too much optimism out there, and misguidedly so. This is
not even remotely justified on the economics," said Hugh Giddy,
managing director at Cannae Capital Partners in Australia.
DOLLAR EDGES UP
The dollar benefited from the economic uncertainty,
extending Thursday's gains as investors booked profits in
higher-yielding currencies including the Australian dollar
<AUD=> and the New Zealand dollar <NZD=>.
The euro <EUR=> was stuck at a three-week low of $1.4513
after falling nearly 0.7 percent on Thursday when the European
Union's Economic and Monetary Affairs Commissioner Joaquin
Almunia said currency's recent gains would be discussed at this
weekend's G7 meeting.
As Japanese stocks fell, December 10-year government bond
futures <2JGBv1> rose to as high as 139.67, their highest level
since late March as financial markets were worried about the
U.S. economic outlook. They overlooked a surprise drop in
Japan's unemployment rate and an unexpected rise in household
spending in August.
U.S. crude oil futures <CLc1> fell about 1 percent towards
$70 a barrel after Washington said talks between Iran and six
major world powers over Tehran's nuclear programme were
productive and opened the door to better ties. []
Gold <XAU> stabilised at around $1,000 an ounce after
falling on Thursday.
(Additional reporting by Anirban Nag in Sydney and Victoria
Thieberger in Melbourne)
(Editing by Kim Coghill)
