GLOBAL MARKETS-Dollar loss deepens, Asian stocks slip

                                
 * Dollar extends slide to 5-month low on FOMC minutes
                                
 * Asian shares ease, Nikkei down 0.9 percent
                                
 * Oil slips below $62 a barrel after steep gains
                                
 By Charlotte Cooper
                                
 TOKYO, May 21 (Reuters) - The dollar hit its lowest in
almost five months and Asian stocks slipped on Thursday after
news that the Federal Reserve lowered its forecasts for U.S.
economic growth for the next three years.
                                
 Japan's Nikkei average <.N225> fell 0.9 percent as the
stronger yen weighed on exporters including Honda Motor Co
<7267.T>, with technology shares down after the world's biggest
PC maker, Hewlett-Packard <HPQ.N>, tempered its outlook for
2009.
                                
 In Europe, financial spreadbetters expected Britain's FTSE
100 <.FTSE> to open as much as 1.3 percent down, and Germany's
DAX <.GDAXI> and France's CAC 40 <.FCHI> to start as much as
1.5 percent lower.
                                
 The dollar hit its lowest in six months against the pound
and nearly five months against a basket of six major currencies
<.DXY> after minutes showed Fed policymakers had mulled buying
more securities at their last policy meeting in April to spur
recovery -- a move which would inject more dollars into the
market. [ID:nN20492043]
                                
 In new quarterly forecasts, the Fed projected the U.S.
economy would contract by between 1.3 percent and 2.0 percent
this year, with the unemployment rate rising to between 9.2
percent and 9.6 percent.
                                
 RECOVERY STILL ON
                                
 In January, the Fed had forecast a milder contraction of
between 0.5 percent and 1.3 percent, with the jobless rate
rising to between 8.5 percent and 8.8 percent.
                                
 "As long as U.S. equities are not sliding sharply, the
tendency in the currency market is to view the global recovery
as still on," RBS strategist Alan Ruskin wrote in a client
note.
                                
 Near-zero U.S. interest rates, reallocation of funds parked
in low-yielding U.S. assets to weather the financial crisis and
latent concerns about the Fed's securities buying programme
were all conspiring to weigh on the dollar, Ruskin said.
                                
 "Taken collectively and despite a poor equity close, the
market is still in a mood to buy the risk trade dip, without
convincing evidence to do otherwise."
                                
 The dollar dipped to a two-month low at 94.28 yen <JPY=>
and eased to $1.3770 per euro <EUR=>, after dipping to its
lowest since early January at $1.3830 on Wednesday. Sterling
jumped to $1.5817, before retreating to $1.5768 <GBP=D4>.
                                
 The MSCI index of Asian shares outside Japan
<.MIAPJ0000PUS> eased 0.5 percent after hitting its highest in
more than seven months on Tuesday.
                                
 Chinese shares <.SSEC> sank 1.6 percent as blue chips fell
on renewed worries about the strength of China's economic
recovery, while Hong Kong <.HSI> fell 0.9 percent. Australia's
S&P/ASX 200 index <.AXJO> edged down 0.2 percent.
                                
 Shares in Seoul slipped 1 percent <.KS11> after losses on
Wall Street due to the gloomier Fed forecasts. [ID:nN20535614]
                                
 WAITING FOR SIGNS
                                
 The Dow Jones industrial average <.DJI> fell 0.62 percent
to at 8,422.04, and the Standard & Poor's 500 Index <.SPX> lost
0.51 percent to 903.47, while the Nasdaq <.IXIC> eased 0.39
percent.
                                
 "We're now at a point where the market's trying to make up
its mind whether to go up or down, and for a recovery we need
to start seeing signs of improvement in the real economy," said
Noritsugu Hirakawa, a strategist at Okasan Securities in Tokyo.
                                
 In Japan, technology shares fell in the wake of a drop by
their U.S. peers, though Sony Corp <6758.T> pared losses to
close down 0.2 percent after saying it plans to halve the
number of its parts and materials suppliers. [ID:nBNG398847]
                                
 Among exporters, Canon Inc <7751.T> and Toyota Motor Corp
<7203.T> both fell, with investors fretting about the stronger
yen, which eats into overseas profits when they are
repatriated.
                                
 U.S. Treasuries rallied on Wednesday after the release of
the minutes from the Fed policy meeting but prices dipped in
Asian trade. The benchmark 10-year yield <US10YT=RR> rose
nearly 2 basis points to 3.217 percent from late U.S. trade.
[US/]
                                
 Japanese government bond futures also lost ground, ending
down 0.17 point at 137.01 after the Nikkei pared its losses.
                                
 The Bank of Japan begins a two-day policy board meeting on
Thursday. But traders said the event is unlikely to have much
impact because the central bank is widely expected to keep its
interest rates near zero. [ID:nT231186]
                                
 Gold <XAU=> was trading at $941.80 an ounce after rising to
an eight-week high above $942 per ounce on Thursday, buoyed by
the rally in oil and the dollar's slide. [GOL/]
                                
 Oil gave back some gains after rallying to a six-month
high, dipping below $62 a barrel <CLc1> after jumping more than
3 percent on Wednesday on news of a deep drop in U.S. crude and
gasoline stockpiles. [ID:nN20506528] [O/R]
 (Additional reporting by Elaine Lies; Editing by Jan
Dahinten)