* Investors cautious ahead of U.S. earnings reports
* Technology shares fall on profit taking
* Commodity prices up on weak dollar, help resource shares
* Taiwan follows China's gradual tightening lead
(Repeats to more subscribers)
By Jun Ebias
HONG KONG, Jan 19 (Reuters) - Asian stocks fell on Tuesday
as investors took profits on a recent run-up in technology
shares and awaited earnings reports from major U.S. companies,
while casting a wary eye on regional central banks taking more
steps to tighten policy.
European shares <> followed Asia lower, dipping 0.2
percent in early trade. But U.S. stock futures <SPc1> were
modestly higher after a U.S. holiday on Monday.
The U.S. dollar eased, giving a boost to oil and commodity
prices, which helped underpin shares of resource companies
despite the broader equity market sell-off.
"Part of the earnings have been exaggerated by record low
interest rates and you can't expect that to carry on for the
next 12 months," said Sean Darby, chief Asia strategist at
Nomura International in Hong Kong.
"Input costs will start to rise now after companies have
been living off cheap inventories for the last six months. That
will also start feeding into their earnings."
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> slipped 0.3 percent, with technology shares the
biggest drag after a sharp run-up in the sector that began
early last year. The Thomson Reuters index of regional shares
<.TRXFLDAXPU> pulled back 0.6 percent.
Chi Mei Optoelectronics <3009.TW>, Taiwan's No. 2 LCD
maker, tumbled 4.1 percent, while South Korea's Samsung
Elecronics <005930.KS> fell 2.4 percent. In Hong Kong, shares
of Foxconn International Holdings <2038.HK> slumped 6 percent.
Japan's benchmark Nikkei average <> dipped 0.8 percent
as the stronger yen weighed on shares of exporters and as
traders took profits from its recent rally, which saw the
benchmark hit a 15-month high last week. Honda Motor Co
<7267.T> was 2.1 percent lower and Toyota Motor Corp <7203.T>
slipped 1.2 percent.
An expected bankruptcy filing by Japan Airlines <9205.T>
had little market impact, with its shares already having
plunged to just 5 yen. []
Taiwan's tech-heavy market was the worst performer in the
region after reaching a 19-month intraday peak on Monday. The
main TAIEX share index <> fell 1.1 percent as investors
trimmed holdings of tech shares heading into earnings season.
Taiwan's central bank on Tuesday followed China's lead to
rein in excess liquidity by raising the rate at which banks
borrow from each other to an eight-month high, suggesting
authorities may be leaning towards monetary policy tightening
to curb inflationary pressures. []
The move came just after China's central bank lifted the
yield in an auction of one-year bills more than expected,
raising worries that authorities may be considering more
aggressive measures to cool lending growth and keep the economy
from overheating. []
The fresh step by the People's Bank of China capped gains
in Shanghai <> and Hong Kong <>, largell offsetting
expectations for strong Chinese economic data due for release
this week. []
Investors were cautious, however, as U.S. financial markets
reopen after Monday's holiday. A slew of key earnings reports
are due this week from heavyweight stocks, including Bank of
America <BAC.N>, Citigroup <C.N>, IBM <IBM.N> General Electric
<GE.N> and Google <GOOG.O>.
Stronger-than-expected results last week from tech
bellwether Intel Corp <INTC.O> failed to excite investors,
while steep loan losses reported by JPMorgan Chase & Co.
<JPM.N> rattled investors on worries that U.S. consumers are
still struggling under the weight of heavy debts.
CURRENCIES
The dollar <JPY=> fell 0.2 percent to 90.55 <JPY=> and hit
a four-week low, while the euro fell to a four-month low
against the pound <EURGBP=D4> as Greece's fiscal woes continued
to take a toll on the common currency.
At a meeting of euro zone finance ministers on Monday,
Greece received the group's backing to tackle its debt
troubles, even as they pressed the country to do more on its
own. []
Greece's ballooning budget deficit and debt of more than
120 percent of GDP has triggered downgrades by debt rating
agencies and hurt the euro <EUR=> in the past few months.
The pound also got a boost from reports that U.S.-based
Kraft Foods <KFT.N> and Britain's Cadbury Plc <CBRY.L> were
arranging a $19 billion deal to create the world's largest
confectionary group. []
But the Australian dollar <AUD=D4> lost ground after the
Chinese central bank move as traders feared gradual policy
tightening by Beijing will curb demand for commodities from
iron ore to oil.
Metal and oil prices rose on the weaker dollar.
Palladium hit a fresh 18-month peak, spurred by the launch
of an exchange-traded fund backed by the metal earlier this
month, while gold <XAU=> inched up $6.10 to $1,138.65.
Oil <CLc1> extended gains scored on Monday, edging up 13
cents a barrel to $78.13.
In the bond market, five-year Japanese government bond
yields <JP5YTN=JBTC> fell a basis point to 0.505 percent after
a solid auction of the maturity, bucking the rise in most other
yields.
(Additional reporting by Umesh Desai in Hong Kong and Aiko
Hayashi in Tokyo)
(Editing by Kim Coghill)
