* Stocks fall on profit taking after weak U.S. consumer
data
* Oil and copper prices weaken on economic pessimism
* China stocks at lowest since mid-June
* Australian and New Zealand dollars hurt by risk aversion
By Umesh Desai
HONG KONG, Aug 17 (Reuters) - Asian stocks tumbled to their
lowest level in over two weeks on Monday as investors raked in
profits amid gloomy U.S. consumer data and a growing belief
that market valuations had overtaken economic fundamentals.
European shares tracked the slide in Asia, with the
FTSEurofirst 300 <> down 1.1 percent.
U.S. S&P stock futures <SPc1> fell 1.5 percent, indicating
a weaker opening for Wall Street, which was sent reeling on
Friday by data showing U.S. consumer confidence fell more than
expected in early August, dropping to its lowest level since
March. []
Oil and metals prices also fell as appetite for riskier
assets cooled and investors sought the safety of U.S.
Treasuries.
The sell-off in Asian stocks was broad-based with
financials, industrials and materials providing the biggest
drag on the MSCI index of Asia Pacific shares traded outside
Japan <.MIAPJ0000PUS>. The index fell 3.3 percent to its lowest
levels so far this month.
Still, the index is up 73 percent since March 9, when the
global equity rally began on hopes the worst of the economic
slump was over and that the growing signs of recovery would
lead to a brighter outlook for corporate earnings.
"This is a reality check. The markets had run up so
quickly, discounting a scenario which is perhaps never going to
materialise," said Bratin Sanyal, Hong Kong-based ING head of
Asian Equity Investments, referring to hopes for a quick
recovery.
Highlighting investor fears that equity markets had grown
overheated, China stocks <> slumped 5.8 percent to their
lowest since mid-June, after dropping 6.6 percent last week.
Investors continued to worried about additional share supplies
from IPOs, adding to fears that authorities will tighten
monetary policy and clamp down on bank lending.
Even after data released on Monday showed Japan's economy
became the third G7 country after Germany and France to pull
out of recession, investors continued to shun growth-linked
currencies such as the Australian and New Zealand dollars.
Japan's Nikkei share average <> was also caught in the
fierce downdraft, slumping 3.1 percent to a two-week low even
as data showed the economy had pulled out of its longest
recession since World War Two. []
Japan's GDP grew 0.9 percent in the second quarter, but
investors fear the world's No.2 economy could lose steam when a
temporary boost from government stimulus peters out.
The growing pessimism prompted some investors to turn to
safe-haven government debt, pushing September 10-year JGB
futures <2JGBv1> to a one-month high.
"Today's data was driven by stimulus steps in Japan and
overseas, so Japan's economy is far from self-sustaining
growth," said Kyohei Morita, chief economist for Japan at
Barclays Capital.
RALLIES FIZZLE
Commodity bulls also retreated, ending a sizzling rally in
oil and copper prices that was largely fuelled by optimism the
global economy had turned a corner.
Oil prices extended steep losses seen on Friday, when they
suffered their biggest one-day fall since end-July, and traded
well below $67 a barrel. Shanghai copper futures <SCFc3> were
limit down, ending last week's four-day rally.
Oil had rallied for four straight weeks, while copper
prices had their biggest weekly rise in over two months last
Friday.
Monday's wave of risk aversion also hurt demand for higher
yielding currencies like the Australian and New Zealand
dollars, which are closely linked to commodity prices.
The Aussie <AUD=> was well off an 11-month high of $0.8479
struck on Friday, falling to a low of $0.8186, while the kiwi
<NZD=> dipped to the day's trough of $0.6682.
The dollar fell against the yen but its losses were mild
after a half-yen fall on Friday, and it was up on the day
against the euro.
The greenback dropped 0.3 percent to 94.60 yen <JPY=>,
close to its lowest for the month but still within a broad
range of 91.70-98.00 seen since mid-June.
The euro shed 0.4 percent to $1.4148 <EUR=>, retreating
further from this month's 2009 peak of $1.4448.
U.S. Treasuries extended last week's gains on the flight to
safety, with the 10-year Treasury notes <US10YT=RR> yielding 4
basis points (bps) lower at 3.53 percent as enthusiasm about
the economic recovery waned and confidence grew the Federal
Reserve will keep interest rates near zero and maintain its
quantitative easing policy for a long time.
(Editing by Kim Coghill)
