(Corrects dateline)
* Euro worries overshadow better than expected China data
* Gold, treasury in demand as safe haven
* Portugal rating warning weighs
By Sanjeev Miglani
SINGAPORE, Dec 1 (Reuters) - The euro slipped further on
Wednesday and stocks in Asia were struggling, despite
stronger-than-expected manufacturing data from China, as fears
of a wider euro zone debt crisis grew.
Investors turned to the safety of gold, which hit a record
in euro terms in early trade, and to U.S. government bonds
after Standard & Poor's put Portugal's credit rating on review
for a possible downgrade, saying the country may have to turn
to the EU and IMF for funding.
Although Lisbon, much like Ireland earlier, denies Portugal
needs aid, markets are already discounting an eventual
Portuguese emergency financial rescue.
While rescuing Portugal would be manageable, assistance
for Spain would sorely test the European Union's resources,
raising deeper questions about the integrity of its
12-year-old currency and possible contagion beyond Europe.
The euro fell to around $1.2969 in early Asia
trade, lows not seen since mid-September, and experts said it
could fall further unless there was strong action.
"You really need some aggressive action from the
authorities in Europe to try and calm nerves and that's really
the key at this stage," Greg Gibbs, a strategist at RBS in
Sydney, said.
The euro has fallen some 9 percent from a November high
around $1.4281 and was down about 7 percent in November, the
biggest monthly fall since May.
CHINA DATA
Stock markets have tracked the euro zone's rolling debt
crisis closely, and on Wednesday the MSCI index of shares
outside of Japan drifted 0.16 percent lower,
despite data from China that showed it had revved up
production in November more than expected, with the official
purchasing managers' index (PMI) rising to a seven-month high.
Shanghai stocks were down 0.2 percent in early
trade and Japan's Nikkei's share average also inched
lower, brought down by constant concern over Europe's debt
problems. The Nikkei fell nearly 2 percent the previous day,
pulled down by tumbling China stocks following a liquidity
squeeze in the share market. On Wednesday, it was 0.2 percent
lower.
"Investors were worried over interest hikes in China and
the
euro zone yesterday and are now waiting for this Friday's U.S.
employment figures and Christmas sales figures to trade on,"
said Fumiyuki Takahashi, equity strategist for Barclays
Capital Japan.
Oil <CLc1> was steady near $84 a barrel while cash gold
priced in euros hit a record at 1,068.70 euros an ounce,
reflecting the worries Europe.
(Editing by Alex Richardson)
* For Reuters Global Investing Blog, click on
http://blogs.reuters.com/globalinvesting
* For the MacroScope Blog, click on
http://blogs.reuters.com/macroscope
* For Hedge Fund Blog, click on
http://blogs.reuterspersistent fears that
Europe'.com/hedgehub
(If you
have a query or comment on this story, send an email to
news.feedback.asia@thomsonreuters.com))
