* Asian shares fall, reversing earlier gains amid caution
* Euro, sterling vulnerable; hefty rate cuts in Europe seen
* Oil prices slump more than $1 to near four-year lows
* U.S. Treasury 10-yr yield hits 53-yr low
(Repeats to more clients, updates with new quote, latest Asian
prices)
By Rafael Nam
HONG KONG, Dec 4 (Reuters) - Asian shares fell on Thursday
as more bad news piled up for the global economy, while the
dollar and yen steadied as central banks in the UK and Europe
were set to cut interest rates to their lowest in years.
Despite a flurry of government measures in recent months
aimed at stabilising financial markets, investor fears of
further losses persist.
Japan said on Thursday it may be in a deeper recession than
first thought, in the latest signal that the global economic
downturn is sparing few corners of the world. []
Benchmark U.S. Treasury yields hit fresh five decade-lows
as fears of a prolonged recession and a slide in Tokyo stocks
prompted investors to seek the safety of low-risk government
bonds.
Oil prices fell to below $46 a barrel to almost four-year
lows, overshadowing bullish weekly U.S. oil stocks data, as
investors opt for safer-havens. The U.S. Treasury 10-year yield
hit their lowest in five decades, helped as well by
expectations for more U.S. purchases of government debt.
Central banks are responding by cutting rates aggressively.
The European Central Bank and the Bank of England on Thursday
are expected to join countries such as Thailand and New Zealand
in slashing borrowing costs.
Whether they prove effective remains the question.
[]
"The market may have become used to extremely weak economic
numbers and are now wanting to see how dramatic policy actions
taken across the globe, including monetary easing, will impact
the economy and the stock markets," said Etsuko Yamashita,
chief economist at Sumitomo Mitsui Bank, in Japan.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 0.4 percent as of 0440 GMT, turning around
after earlier gains of as much as 1.2 percent.
The MSCI index has advanced more than 10 percent since
hitting a five-year low on Nov. 21, but is still down 59
percent for the year as of Wednesday's close.
Although Wall Street rose on Wednesday for a second session
on the back of defensive stocks seen as riding out a recession,
newly released data showed large job losses among U.S.
employers and a slumping service sector, suggesting the worst
may not be over for the world's largest economy.
[]
Other economies worldwide are faring no better. A corporate
survey in Japan on Thursday signalled the economic performance
in the world's second-largest economy in the third quarter may
have been even worse than first reported. []
Central banks have been cutting rates aggressively.
Thailand on Wednesday cut its benchmark by a full percentage
point, while New Zealand slashed them by a record 150 basis
points to their lowest in five years. See []
Policy makers are also taking additional steps to stabilise
their financial sectors. South Korea and China on Wednesday
said they would pump more funds into their financial system to
ensure additional liquidity. [] and [
Japan's Nikkei average <.N225> fell 1.6 percent, reversing
itself after earlier rising as much as 1.3 percent.
Major share indexes in South Korea <.KS11> and Taiwan
<.TWII> fell more than 1 percent each, while Australia <.AXJO>
was down just 0.1 percent.
But shares in Shanghai <.SSEC> rose 3.5 percent, as
financial stocks benefitted from the government's liquidity
measures on Wednesday and amid hopes for more economic
stimulues measures.
Indexes in Hong Kong <.HSI> and Singapore <.FTSTI> also
advanced.
DOLLAR, YEN STEDAY
The euro and the British pound remained vulnerable ahead of
central bank meetings later in the day. The ECB is expected to
cut rates by 50 basis points, though some are betting it could
be as much as a record 75 basis points. [ID:nL3148012]
The BOE could opt for a full percentage point cut that
would bring rates to their lowest in more than half a century.
[]
The euro fell 0.1 percent to $1.2709 <EUR=> from late New
York trade, while the sterling edged down 0.1 percent to
$1.4770 <GBP=D4>.
Against the Japanese yen, the dollar was flat at 93.25 yen
<JPY=>, while the euro was also little changed at 118.54 yen
<EURJPY=R>.
The size of the interest rate cuts being considered are an
indication of the weakness of the global economies.
Oil prices lost $1.15 to $45.65 a barrel, continuing a
slump this week that has seen prices hit their lowest in more
than three years.
Gold <XAU=> also slipped as the dollar firmed against the
euro, trading at $769.85, down $2.65 from New York's notional
close. Other metals were routed: Platinum <XPT=> traded at
$791.00 an ounce, or down $2.5.
Low-risk investments such as U.S. Treasuries are
benefitting from worldwide risk aversion.
The benchmark 10-year notes edged up 3/32 in price to yield
2.645 percent <US10YT=RR>, down from 2.655 percent in late New
York trade on Wednesday and the lowest level since 1955.
The yield has dropped more than 100 basis points in the
past month as fear of a protracted recession prompted investors
to shift their funds to government debt from more risky assets.
For the latest stories on the globla financial crisis,
click on []
(Additional reporting by Satomi Noguchi in TOKYO; Editing by
Kim Coghill)
