By Rafael Nam
HONG KONG, March 20 (Reuters) - Gold, other metals and
commodities fell sharply on Thursday as doubts about the global
economy seeped into asset classes that hit record highs earlier
this week. Asian shares slid on renewed credit crisis fears.
Bonds in Asia gained, as risk aversion returned to the
region a day after investors cheered hefty U.S. interest rate
cuts and resilient results from leading U.S. investment banks.
The dollar was mixed in choppy trade, as hopes of averting
a slowdown in the United States, the world's largest economy,
appeared dashed, though volumes were reduced as markets in
Japan were closed for a public holiday.
"We're seeing a return to reality with regard to the
situation in the U.S.," said Savanth Sebastian, equities
economist at CommSec in Australia. "The trend in the U.S.
remains the same, credit markets remain tight and possible
writedowns can continue."
The MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> fell 2.5 percent by 0212 GMT. The index dropped
to its lowest since August earlier this week before rebounding
on Wednesday.
Shares in Australia <> dropped 2.8 percent as resource
firms such as BHP Billiton <BHP.AX>, the world's biggest miner,
slumped, while shares in China <> were down 2.5 percent.
Markets in South Korea <> and Singapore <.FTSTI> fell
more than 1 percent, while Taiwan's main stock index <>
dipped 0.2 percent.
Concerns about a financial credit crisis returned after
Merrill Lynch <MER.N> said on Wednesday it sued a U.S. bond
insurer to stop it from backing out of credit guarantees,
fuelling speculation the U.S. investment bank may need to take
further writedowns. []
Asian stocks have had a volatile week that started with
worries about more casualties following the fire sale of Bear
Stearns <BSC.N> to JPMorgan & Chase <JPM.N>.
But markets perked up mid-week following the U.S. Federal
Reserve's rate cut and not-as-bad-as-expected results from
Goldman Sachs <GS.N> and Lehman Brothers <LEH.N>
GOLD SLUMPS
Metals extended a sharp fall from the previous session amid
concerns that a U.S.-led economic slowdown could undermine
global demand.
Analysts saw a shift to U.S. Treasuries after a U.S.
government regulator cleared the way for the country's housing
finance agencies Fannie Mae and Freddie Mac to pump up to $200
billion into the distressed U.S. mortgage market.
[]
"Commodities was the one area that had been untouched by
the credit chaos, but that seems to be changing," said Robert
Rennie, chief currency strategist at Westpac in Australia.
Gold tumbled more than 2 percent in Asian trade to its
lowest level in more than a month as funds cashed in after
pushing the metal to a record $1,030.80 an ounce on Monday.
Bullion <XAU=> was last traded near $930 after hitting a
session low of $922.90, the lowest since Feb. 20.
Metals from platinum to silver had been routed a day
earlier, with gold falling 6 percent on Wednesday in its
biggest one-day percentage drop in nearly two years. The falls
spread to commodities, with the Reuters-Jefferies CRB Index
<.CRB> hitting a 1-month low on Wednesday.
U.S. crude futures also fell after slumping in the previous
session. U.S. crude for May delivery <.CLc1> was off 57 cents
at $101.97 a barrel. The April contract hit a record $118.80 on
Monday.
The dollar was pinned at 98.90 yen <JPY=>, little changed
from New York's close and well off Wednesday's high of 100.44.
The U.S. currency was trading at $1.5584 per euro compared with
$1.5608 in late U.S. trade.
The global market uncertainty lifted some Asian bonds, with
Australia's three-year contract <YTTc1> up 0.105 to 93.98, and
the 10-year contract <YTCc1> up 0.115 to 94.035.
