* Economic worries cool optimism over China stimulus plan
* MSCI Asia ex-Japan down 3 pct, oil 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, adds economic data, money
market activity and European outlook)
By Eric Burroughs
HONG KONG, Nov 11 (Reuters) - Asian stock markets and oil
prices retreated on Tuesday while the yen pushed higher as a
souring economic outlook cooled 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 cast a shadow over equities.
[]
European shares were set to drop about 1.5 percent,
following the losses in Asia and on Wall Street, financial
bookmakers said.
China's nearly $600 billion package, along with
expectations U.S. President-elect Barack Obama will push for
more fiscal spending to revive the economy, spurred investor
risk-taking on Monday.
"We're still getting pretty weak economic data, and I don't
think that's going to change anytime soon," said Sean Darby,
chief Asia strategist at Nomura in Hong Kong.
Darby said that investor conviction remains low and many
market players were not seeing strong reasons to pick up
battered shares yet.
The MSCI Asia ex-Japan <.MIAPJ0000PUS> fell 3 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.
GLOOMY DATA
Tuesday offered more gloomy economic data, with confidence
among Japanese service sector workers hitting a record low in
October and South Korean exports sliding 26 percent during the
first part of November from a year earlier.
Japan's Nikkei average <> shed 3 percent to 8,809.30
after having jumped nearly 6 percent the previous day.
Automakers and exporters led the decline.
The Shanghai Composite Index <> and Hong Kong's Hang
Seng <> held up better than other markets, losing 0.6
percent.
Construction and infrastructure-related companies climbed
for a second day on hopes that China's big spending targetting
infrastructure would provide a boon of new orders.
In commodities, U.S. crude oil prices <CLc1> were down
$1.87 a barrel to $60.54 on worries about global demand,
falling 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>. The euro slipped 0.2 percent to $1.2730 <EUR=>.
Dollar money market trading was quiet due to U.S. bond
markets being closed for the Veterans Day holiday, though stock
markets will be open as usual.
Three-month dollar rates in Singapore dipped to 2.2 percent
to 2.75 percent from 2.3 percent to 3.0 percent. Investors and
policy makers around the world are closely watching funding
rates for any signs that the crippling global credit crunch may
be easing.
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.
Highlighting the cross-asset liquidation in October, data
on Tuesday showed foreign investors dumped a record 2.7
trillion yen ($27.6 billion) of Japanese bonds in addition to
1.32 trillion yen ($13.5 billion) of stocks last month.
"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 in Tokyo.
"The yen could rise further if there are more funds rushing
to liquidate positions, but the peak may have passed for now."
Japanese government bonds jumped on the drop in stocks and
a solid auction of five-year notes.
JGB futures <2JGBv1> jumped 0.89 point to 138.09, while the
gains pushed the benchmark 10-year Japanese government bond
yield <JP10YTN=JBTC> down 4 basis points to 1.485 percent.
(Editing by Kim Coghill)
