* Nikkei touches 16-mth low as exporters stung by strong
yen
* Yen slips on report Japan considering solo intervention
* Dismal U.S. home sales stoke double-dip recession fears
* Commodity, tech sectors lead broad Asia equity decline
(Repeats to more subscribers)
By Kevin Plumberg
TAIPEI, Aug 25 (Reuters) - Asian stocks fell on Wednesday,
with Japan's Nikkei at a 16-month low, as investors sold
riskier assets after a spate of worrying U.S. economic data,
while the yen slipped from a 15-year high on a report Tokyo was
considering weakening its currency.
But even if Japan's government acted alone to try and halt
yen strength, dealers were sceptical it could reverse the
growing unwillingness among investors to take risks that has
underlied the yen's 10 percent rise against the dollar so far
this year. []
"The dollar went to 83 yen, so the chance of intervention
has increased, but it would take more than intervention," said
Kiichi Murashima, economist at Citigroup Global Markets in
Tokyo.
"It has to be coupled with easing by the BOJ to have any
impact," he said, referring to any further monetary policy
easing by the Bank of Japan.
The dollar rose 0.6 percent against the yen to 84.37 yen
<JPY=> on short-covering, having pulled up from a 15-year low
of 83.58 yen hit on trading platform EBS on Tuesday.
Adding to investors' worries about exposure to riskier
assets, key U.S. stock indexes fell as much as 1.7 percent
overnight after an unexpected plunge in existing home sales
amplified fears that the economy could be sliding into a
prolonged period of stagnation or even recession. []
Chicago Federal Reserve Bank President Charles Evan said
the risks of a double-dip U.S. recession have risen in the last
six months. While he added he did not think that was the most
likely scenario, he said high unemployment and a fractured
housing sector would make the recovery a fragile one.
[]
U.S. stock futures <SPc1>, though, were up 0.3 percent on
Wednesday, with bargain hunters expected to provide some
support.
That eased the blow on Asian stock markets, but an
unmistakable falling trend in government bond yields around the
world reflected deep unease about the prospect of another
recession.
Japan's Nikkei share average fell 0.85 percent after
earlier hitting the lowest since May 2009. []
Shares of exporters such as Honda Motor Co <7267.T>, which
was down around 2 percent, have been stung by the rising yen.
The currency's strength has blown past many exporters'
assumptions for the year, threatening to crimp profits even as
global demand appears to be cooling.
The MSCI index of Asia Pacific stocks outside Japan slipped
0.35 percent <.MIAPJ0000PUS>, led by sectors most sensitive to
business cycles such as raw materials and technology.
However, the index, which is down 3.6 percent on the year,
has held up better than the all-country world index, which has
fallen 7.1 percent <.MIWD00000PUS>.
Asia's relative growth advantage over Western economies has
been a buffer against recent shocks, with emerging markets
managing to keep attracting portfolio investment.
India's stock market, for example, has absorbed $8 billion
in foreign equity inflows since June, TrimTabs Investment
Research said in a report.
WILL JAPAN INTERVENE?
Caution on the yen initially stemmed from a Nikkei business
daily report saying Japan's Ministry of Finance may consider
unilateral yen-selling intervention without the blessing of
other advanced economies if speculators drive up the currency.
[]
Finance Minister Yoshihiko Noda reinforced that view,
telling reporters on Wednesday that recent yen moves were
one-sided and Tokyo will respond appropriately when necessary.
[] The euro rose 0.2 percent to $1.2652
<EUR=>, mostly ignoring Standard & Poor's sovereign credit
rating downgrade of Ireland.
The possibility of additional easing by the Federal Reserve
has hurt the dollar's attractiveness, but persistent concerns
about Europe's fiscal health have prevented investors from
running to the euro en masse.
Japanese government bonds extended gains as investors moved
into less risky assets, with the benchmark 10-year yield
touching a fresh seven-year low, as the yen's surge nudged up
the previously negligible chances of monetary policy easing by
the Bank of Japan before its rate review next month.
[] The most likely move by the BOJ would be
simply to increase the amount or extend the time period of a
fixed-rate fund supply operation to banks, but market watchers
doubt that would do much to halt the yen's climb or spur more
bank lending to boost the fragile economy.
(Additional reporting by Leika Kihara and Tetsushi Kajimoto
in TOKYO)
