* Asian shares slump on global economic fears
* Dollar hits 2-mth high against major currencies; yen
gains
* Euro, pound pressured by concerns in European outlook
* Investors flocking to U.S. corporate bonds - EPFR
By Rafael Nam and Kevin Plumberg
HONG KONG, Feb 16 (Reuters) - Asian stocks slumped on
Monday as doubts intensified about the health of the global
economy and other troubled areas, such as the financial and
auto sectors, hitting beleaguered currencies such as the euro
and sterling.
Data on Monday showed Japan's economy shrank in the last
quarter at its fastest quarterly pace since the oil crisis in
1974, and in another sign of the deepening global crisis,
Standard & Poor's warned it may cut credit ratings for Ukraine.
[]
European shares were set to fall on Monday, with investors
closely eyeing banks and automakers.
The G7 meeting of financial leaders over the weekend in
Rome concluded with no public expressions of concern on either
the Japanese or the British currency, leading the yen higher
but sterling lower.
"Everyone is betting on a further rise in the yen, also
because few believe governments can come up with new steps
effective enough to turn around the global economy," Hideki
Amikura, deputy general manager of forex trading at Nomura
Trust and Banking in Japan.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> had dropped 2 percent as of 0720 GMT, while the
Nikkei <> closed down 0.4 percent in choppy trade.
Among the big decliners were lenders such as HSBC <0005.HK>
in Hong Kong, and auto makers such as South Korea's Hyundai
Motor <005380.KS> and Japan's Toyota Motor <7203.T>.
Investors have yet to fully embrace equities, despite
actions taken by governments worldwide, including the U.S.
Congress approval on Friday of a $787 billion stimulus
programme for the world's largest economy. []
The global economic slowdown has been steeper than many had
expected. Japan's weak data on Monday follows a report last
week showing the euro zone economy saw its deepest contraction
on record in the fourth quarter.
Global auto makers are now competing with banks for
government attention. The U.S. administration has decided to
launch a government task force for restructuring the U.S. auto
industry, instead of naming a "car czar" with sweeping powers,
reports on Monday said. []
The news comes as U.S. auto makers face a Tuesday deadline
to submit new restructuring plans to the U.S. government.
Among major Asian indexes, Indian shares <> were the
worst hit with a 3.3 percent decline after an interim budget
unveiled on Monday failed to live up to investor expectations.
Indexes in South Korea <>, Hong Kong <.HK>, and
Australia <> fell more than 1 percent each, with more
modest losses seen elsewhere.
NOT ALL SUFFER
Not all asset classes are being hit.
Greater China equity funds saw the biggest capital inflows
last week since late April 2008 while U.S. bond funds took in
fresh money for a sixth straight week, Boston-based research
firm EPFR Global said.
"The second week of February offered investors little to
cheer about," EPFR said in a note. "But, as has been the case
for the past three months, the latest flow data contained some
bullish signals," citing new money in high-yield bond funds and
outperforming U.S. equity funds centred on growth.
But the situation is more dire in other parts of the world,
including in central and eastern Europe, which are facing steep
capital outflows and an erosion in government finances.
A key gauge of the dollar rose to a two-month high against
a basket of currencies, or up 1 percent at 86.871 <.DXY>.
The euro fell nearly 1 percent to $1.2740 <EUR=EBS>, while
sterling slid 0.8 percent to $1.4237 <GBP=>.
The yen though rose against the dollar to 91.65 from 91.95
late on Friday.
Elsewhere, Japanese government bonds fell despite the weak
economic growth data, on worries the government would implement
bigger stimulus plans financed in part by the issuance of new
debt.
March 10-year JGB futures <2JGBv1> fell 0.36 point to
139.00. Futures had touched 139.41 on Friday, the highest since
late January. The benchmark 10-year yield <JP10YTN=JBTC>
climbed 3.5 basis points to 1.290 percent.
U.S. crude futures <CLc1> traded steady at $37.50 a barrel,
while gold <XAU=> dipped slightly from late U.S. trading on
Friday as investors booked profits on both following their
recent gains.
