* Stocks down 3 pct, poor US retail sales hits recovery
hopes
* Dollar index up from 4-month low, technical outlook
darkens
* Oil slips from 6-month highs, gold steady
By Eric Burroughs
HONG KONG, May 14 (Reuters) - Asian stocks fell on
Thursday as weak U.S. retail sales highlighted the long road to
economic recovery, prompting profit-taking on winning bets in
equities, higher-yielding currencies and commodities over the
past two months.
The retreat in Asian shares tracked the overnight drop on
Wall Street after retail sales posted an unexpected drop in
April and suggested that consumers were still struggling from
job losses, falling home prices and tighter credit.
The dollar edged up from a four-month low hit the previous
day as investors gradually shifted funds away from the
safe-haven U.S. currency and into riskier assets on hopes the
global economy had bottomed out from its deepest recession
since World War Two.
Oil prices pulled further away from a six-month peak
reached this week, while the Australian dollar edged up but was
off a seven-month high reached earlier in the week.
Government bonds gained on the troubles in stocks, helping
lift Japanese government bond futures off a nearly seven-month
low hit the previous day.
Analysts said markets were likely seizing on the poor U.S.
data to take profits on positions that global growth was slowly
picking up, which drove up Asian shares more than 50 percent at
one point from their low mark in early March.
But more portfolio managers are seen shifting money into
equities and other riskier assets, having sat on the sidelines
for several months following last year's historic sell-off
across many markets.
"The market needs to take a break, and any pull-backs are
going to be met with some more money coming in from the
sidelines," said Chris Kimber, a client adviser with Bell
Potter Securities in Sydney.
Ratings agency Standard & Poor's said in a report on Asian
economies on Thursday that it was too early to say the global
economy has bottomed.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> dropped more than 3 percent but was still up
some 20 percent since the start of the year and 46 percent from
its year low struck in March.
On Wednesday, the S&P 500 <.SPX> shed 2.7 percent, and
futures on that U.S. stock index <SPc1> were down slightly in
Asia.
Japan's Nikkei average <> fell 2.6 percent, while Hong
Kong's Hang Seng index <> shed 3.2 percent.
Investors are also keeping an eye on the results of India's
general election. The ruling Congress-led coalition is slightly
ahead of the opposition Hindu nationalists-led alliance, but
both groups have fallen short of a parliamentary majority,
according to early projections. []
DOLLAR LIMPS UP, BONDS JUMP
The dollar limped up from a four-month low hit on
Wednesday, partly on the revival of risk-taking but also
because its break through the 200-day moving average against
the euro sparked wide selling.
Chart technicals for the U.S. currency have turned negative
since the break of the widely tracked 200-day moving average,
which has signalled turning points against the euro in the
past.
The euro slipped 0.2 percent to $1.3562 <EUR=> after having
jumped to $1.3722 the previous day, threatening to push above
the peak reached in March that would likely add fuel to the
rise.
The dollar index, a gauge of its performance against six
major currencies, edged up 0.2 percent to 82.689 <.DXY>.
Against the yen, the dollar was little changed near 95.40 yen
<JPY=>.
The dollar's slide had reinforced a jump in gold and oil
prices. Gold was steady at $925.60 <XAU=>, while U.S. crude
<CLc1> dipped 29 cents to $57.73 after having climbed as $60.08
this week.
Battered bonds recovered as stocks lost ground.
JGB futures <2JGBv1> were up 0.45 point at 136.95 after
having fallen to their lowest since late October on Wednesday.
The benchmark 10-year JGB yield <JP10YTN=JBTC> was down 3 basis
points to 1.420 percent.
South Korean government bond prices rebounded sharply in
early trade after the nation's top financial policy maker gave
another cautious outlook for the economic recovery.
Korean government bond futures <KTBc1> rose 24 ticks,
bouncing from a one-month low hit this week.
(Editing by Mathew Veedon)
