* Broker comments, IMF view on toxic assets cause caution
* Benchmark Asia ex-Japan share index hits resistance
* Yen, U.S. dollar gain as risk taking is set aside
* Suspense grows: what will Australia's central bank do?
By Kevin Plumberg
HONG KONG, April 7 (Reuters) - Asian stocks slipped on
Tuesday, snuffing a five-day rally as uncertainty about U.S.
banks pushed dealers to take profits on recent gains, while
investors' reduced willingness to take risks lifted the U.S.
dollar and yen.
Gloomy comments from high-profile U.S. bank analysts
overnight, as well as a dark prognosis on the financial system
from billionaire investor George Soros, weighed on Wall Street
and supported gold prices. []
Adding to unease about the financial sector, the
International Monetary Fund is expected to report in coming
weeks that a deterioration in U.S. bad assets could increase to
as much as $3.1 trillion, far more than the $2.2 trillion the
institution had earlier forecast, The Times newspaper reported
in Britain. []
The global banking system and financial markets are likely
to remain on shaky ground, impeding hopes for economic
recovery, until the mountain of bad loans, mortgages and
financial derivatives is cleared.
"The market's stance on banks had been too optimistic
recently," said Nagayuki Yamagishi, a strategist at Mitsubishi
UFJ Securities in Tokyo. "Some large U.S. banks have already
passed stress tests, but others haven't, and given that results
are coming up soon, this simply reignited investor
uncertainty."
Even before the comments on banks, stock traders wondered
when the market would pause for breath after a 10 percent rally
in the last five days pushed a benchmark Asia ex-Japan equities
index up against a major technical obstacle on the charts.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 1.2 percent, after briefly touching a
six-month high on Monday. The index, now at 264.30, has not
been able to clear 270 since October 2008.
In Japan, shares of top bank Mitsubishi UFJ Financial Group
<8306.T> were down 1.4 percent and Shinsei Bank <8303.T> was
off 3.7 percent.
The Nikkei share average <> was largely unchanged with
weakness in bank stocks offset by strength in automaker shares,
which have continued to gain on hopes General Motors <GM.N>
will be able to avoid an industry-splintering collapse.
Bank stocks were also under fire in Australia, where
National Australia Bank <NAB.AX> dropped 2.7 percent and
Macquarie Group Ltd <MQG.AX> was down 2.8 percent.
The benchmark S&P/ASX 200 index <> fell 0.9 percent
after hitting a three-month high on Monday.
Hong Kong's Hang Seng index <> slid 1.4 percent, led by
HSBC stock <0005.HK>, which dropped 2.3 percent.
WILL THE RBA STAY PUT?
The yen and the dollar climbed, benefiting from defensive
position-taking as the optimism that powered a recent rally in
stocks and higher-risk currencies gave way to caution about
banks.
The dollar slipped 0.2 percent to 100.79 yen <JPY=>, after
rising above 101.40 yen on Monday, the highest since late
October. The dollar has strengthened by some 12 yen since
February, as more investors dump the what has been considered
relative safety in the yen for higher returns elsewhere.
The euro fell 0.4 percent on the day to $1.3358 and was
down 0.6 percent to 134.65 yen <EURJPY=R>, after hitting a near
six-month high on Monday.
"The relationship has been firmly set that the U.S. dollar
strengthens during episodes of risk aversion. Last week's rally
in equity markets was certainly of questionable sustainability
given it was in part fuelled by changes to accounting law,"
said Ashley Davies, currency strategist with UBS in Singapore
in a note.
The focus during the Asian trading day was on a policy
decision from the Reserve Bank of Australia, which is expected
to keep rates on hold at 3.25 percent, according to a Reuters
poll, though it was a close call.
The RBA surprised markets in March by pausing and other
central banks, including the European Central Bank, have since
either left rates on hold or cut by less than expected.
A cut by the RBA when some are expecting the central bank
to hold steady may send a message of concern about tentative
signs that the economic downturn may be bottoming out across
the region.
With risk taking taking a back seat, gold prices in the
spot market <XAU=> fell 0.8 percent to $875.55 after dipping to
a near three-month low overnight.
U.S. crude for May delivery was stable around $51 a barrel
ahead of weekly U.S. inventories data. Oil prices have been
tracking rallying equity markets and have gained around $15
since mid February.
The U.S. government bond market continued to be mostly
governed by expectations about upcoming supply and whether
demand would hold up.
The yield on the U.S. benchmark 10-year note <US10YT=RR>
was at 2.91 percent, dipping from 2.94 percent where it ended
New York trade.
