* Warnings on corporate outlooks proliferate
* Need for safety helps yen, U.S. dollar; euro at 2-month
low
* High-grade credit hot as spreads over US Treasuries
narrow
By Kevin Plumberg
HONG KONG, Feb 2 (Reuters) - Asian stocks slipped on Monday
while the yen and U.S. dollar advanced, with investors
expecting another week of grim news on corporate earnings and
the global economy.
Rising inventories and a severe pullback in consumer demand
in the face of a global economic crisis have had a shock effect
on companies around the world and many have been slashing their
forecast results for 2009. Hitachi Ltd <6501.T> stocks tumbled
18 percent after it warned of a record annual loss.
Dismal U.S. economic reports as well as uncertainty about a
massive fiscal stimulus package in Washington helped spark the
worst Wall Street January performance ever. U.S. Treasury bonds
meanwhile have provided little solace since dealers have been
lately more concerned about the government's growing borrowing
needs to finance multiple rescue plans.
"There's no question that the global economy has worsened a
notch more, and concerns about this will be in a tug-of-war
with expectations for economic stimulus policies," said
Hiroichi Nishi, general manager at the equity division of Nikko
Cordial Securities in Tokyo.
Japan's Nikkei share average <> fell 0.5 percent, down
for a second day. In addition to Hitachi, shares of bearing
maker NTN Corp <6472.T> and Fujifilm Holdings Corp <4901.T>
both fell after the companies slashed their profit outlooks.
In Australia, where the benchmark stocks index was down 1
percent <>, shares of miner Rio Tinto Ltd <RIO.AX> were up
6.2 percent after state-owned Chinese aluminium company
Chinalco held talks with Rio to take a stake in the firm.
[]
Stocks in Asia-Pacific outside Japan <.MIAPJ0000PUS> were
down 1.1 percent, according to an MSCI index.
Hong Kong's Hang Seng index <> fell 2 percent, weighed
by a 1.6 percent decline in HSBC <0005.HK>. Europe's largest
bank has seen its Hong Kong-listed stock post a sixth
consecutive month of declines in January.
THE YEN'S TREND IS YOUR FRIEND
The yen rose against major currencies, proving the haven of
choice for global investors seeking safety.
"Basically, the market trend has not changed after data in
the U.S. and the euro zone showed faltering economies," said
Yuichiro Nakamura, FX dealer at Shinkin Central Bank in Tokyo.
"The yen is the key beneficiary, and the dollar is the next."
The U.S. dollar was at 89.65 yen <JPY=>, slipping 0.3
percent from late U.S. trade on Friday. The euro declined 0.8
percent to 114.38 yen <EURJPY=R>.
The euro dipped to a two-month low against the dollar
around $1.2715 <EUR=> amid anxiety about the slumping economy
in Europe and ahead of a European Central Bank meeting this
week.
The Australian and Indonesian central banks were also
expected to set policy this week, with both expected to deliver
interest rate cuts in hopes of easing the blow of global
recession.
Japanese government bonds were in demand with equity
markets under pressure. The lead 10-year bond future <2JGBv1>
rose 0.1 point to 139.01, though it has remained in a fairly
narrow trading range for the last two months.
U.S. Treasuries were mostly a bit higher after crashing in
January. The benchmark 10-year note's yield <US10YT=RR>, which
moves in the opposite direction of the price, was at 2.85
percent compared with 2.86 percent late on Friday in New York.
The yield shot up 63 basis points in January, the biggest
monthly increase since April 2004, according to Reuters data.
The move up in yields has narrowed their difference with
corporate bond yields, increasing their appeal for investors as
a hedge against adverse movements in government debt.
"A worse economy pushes government yields down but credit
spreads wider. A better economy does the opposite. For
high-quality bonds (A rated), these two effects could nicely
offset each other, producing a similar return for the holder
under either scenario," said asset allocation strategists with
JPMorgan in London in a note.
The U.S. crude oil future for March delivery has kept above
$40 a barrel for about two weeks, with the market speculating
on additional measures by OPEC to put a floor under prices.
Crude was up 22 cents to $41.91 a barrel <CLc1> []
(Additional reporting by Aiko Hayashi and Kaori Kaneko in
TOKYO; Editing by Kazunori Takada)
