(Updates prices, adds quotes)
By Tom Miles
HONG KONG, April 14 (Reuters) - Asian shares tumbled on
Monday after the Group of Seven nations' efforts to support the
U.S. dollar failed to take the sting out of a nasty earnings
surprise from General Electric Co <GE.N>.
European stocks fell in early trade on Monday, with the
pan-European FTSEurofirst 300 index <> down 0.5 percent
at 1,278.1.
The G7 nations surprised investors by expressing concern
about sharp swings in major currencies, the strongest signal
since 2000 that world leaders were unwilling to stand idly by
as the dollar dropped. []
The dollar rose in early Asian trade, depressing prices for
dollar-denominated oil <CLc1>, gold <XAU=> and other metals,
but it later surrendered gains against both the euro <EUR=> and
the yen <JPY=>. By 0710 GMT, the dollar was trading at 100.62
yen and the euro was at $1.5774, having fallen as far as
$1.5658.
"The dollar's weak trend doesn't change just because a G7
communique expressed concern about the currency's weakness, as
it is based on fundamentals," said Tohru Sasaki, chief forex
strategist at JPMorgan Chase Bank. "The dollar's upside is
limited as the market turns to earnings and data."
PROFIT RISK
The attempt to support the dollar, which has slid from 123
yen at the start of July 2007, made little impression on Asian
stockmarkets, which took fright from Friday's shock 6 percent
earnings fall from General Electric Co <GE.N> and fresh data
pointing to a U.S. recession.
The surprise from GE, viewed as an economic bellwether
because of the range of its businesses, suggested the credit
crisis would cast a pall over the upcoming earnings season,
dragging industrial firms into a slowdown that began with
banks.
"We've seen the immediate effect of the credit crisis on
financials and there is a second round effect where it hits
activities and profit growth in broader corporates," said Simon
Doyle, head of strategy at Schroder Investment Management in
Sydney.
"For most of this year, were going to be watching profit
growth, or lack thereof. Thats the big risk to equity markets
now."
Japan's Nikkei average index <> closed 3.1 percent
percent lower while shares across the rest of Asia, gauged by
MSCI's index <.MSCIAPJ>, fell 2.2 percent.
The rocky ride for the U.S. stock market may intensify this
week, with earnings reports from JPMorgan Chase <JPM.N>,
Merrill Lynch <MER.N>, Citigroup <C.N> and other large banks
and financial services companies, as well as reams of economic
data.
Among Asia's losers was Australian airline Virgin Blue
Holdings Ltd <VBA.AX>, the latest carrier to warn of the pain
of higher fuel prices. Its shares slumped 22 percent to A$0.87,
the worst one-day percentage fall on record [].
The selloff even pushed Taiwan's TAIEX <> into reverse
as technology firms suffered from fears about the U.S. appetite
for exports. The index hit a 5 month high on Friday, buoyed by
hopes of closer ties with China.
The Shanghai Composite <> fell almost 6 percent on
Monday on fears of domestic inflation.
The same fears sapped investors' appetite for Shanghai zinc
<SZNM8> and copper <SCFM8>, while the stronger dollar and
gloomy economic outlook weighed on commodities across the
board.
BONDS
Weaker stock markets pushed up Japanese government bond
futures more than a half point as investors shifted money back
into debt. June futures climbed 0.59 points to 139.9 <2JGBv1>
after jumping as high as 140.01. The benchmark 10-year yield
fell 4 basis points to 1.335 percent <JP10YTN=JBTC>.
"The result (of the G7 meeting) was unsatisfactory to wipe
out worries about credit risks," said Jun Ishii, chief fixed
income strategist at Mitsubishi UFJ Securities in a note to
clients.
U.S. Treasuries were little changed in Asia as investors
waited to see what recession signals the week would bring.
"In thin trading volume, players are nervously trading on
speculation over earnings results, buying on talk of larger
credit-related losses and selling on talk of capital-boosting
measures," said a dealer at a Japanese trust bank.
Among the data due this week are U.S. retail sales, producer
prices and consumer prices.
(Additional reporting by Masayuki Kitano in TOKYO, Geraldine
Chua in SYDNEY)
