* Nikkei slides 4.3 pct; other Asian shares down moderately
* Euro slides ahead of expected ECB rate cuts this week
* Government bonds gain on safe-haven bids
* S&P cuts New Zealand outlook, sending Kiwi lower (Repeats
to more subscribers)
By Rafael Nam
HONG KONG, Jan 13 (Reuters) - Fears of steep losses at
corporate bellwethers from Citigroup to Sony hit Asian shares
on Tuesday, signalling the extent of the global economic
slowdown and bolstering less risky assets such as government
debt.
The euro extended its slide to near a one-month low against
the dollar as the European Central Bank looks set to cut
interest rates this week in response to slowing growth, while
oil prices continued to fall after slumping nearly 8 percent on
Monday on fears that recessions in some countries will slash
energy demand.
Still, losses in Asian shares were not as steep as in
previous days, while the Export-Import Bank of Korea sold $2
billion in five-year dollar bonds, indicating demand for new
issuance in regional credit markets, albeit at a premium.
"Earnings and economic disappointments are the main
contributors to the rise in risk aversion both of which are
likely to act as a persistent drag on markets over coming
weeks," Calyon analysts said in a note to clients on Tuesday.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 0.4 percent as of 0230 GMT, marking its
fifth consecutive losing session.
After starting the year with gains, the MSCI indicator is
now down more than 3 percent so far in 2009.
Concerns over big quarterly losses kept investors on edge.
Citigroup <C.N> could record a fourth-quarter operating loss of
over $10 billion, the Wall Street Journal reported on Monday,
while U.S. aluminum producer Alcoa <AA.N> announced a
fourth-quarter loss. []
Asia's export companies are also hurting as major overseas
markets such as the United States are mired in recession.
Sony Corp <6758.T> may post an operating loss of about $1.1
billion this financial year, its first such loss in 14 years, a
source close to the matter told Reuters, confirming an earlier
newspaper report. Its shares dropped 8 percent.
Japanese exporters are being squeezed not only by slower
global demand but also the surging yen currency. The Nikkei
<> fell 4.3 percent, after being closed on Monday for a
public holiday.
Other Asian markets, some of which saw steep losses on
Monday, had more moderate falls. Shares in Australia <>
and China <> fell more than 1 percent.
But indexes in South Korea <>, Hong Kong <> and
Taiwan <> posted modest gains, while Singapore <.FTSI>
advanced 1.5 percent.
RATINGS TO SUFFER
Easing inflation, largely due to slumping energy prices, is
giving central banks room to cut interest rates in response to
the economic turmoil.
The ECB is expected to cut key interest rates by 50 basis
points to 2 percent on Thurday, according to a Reuters poll,
though money market futures were showing investors betting on a
75 basis point cut or even a full percentage move. <ECBWATCH>
The euro fell 0.4 percent from late New York trade to
$1.3308 <EUR=>, approaching a one-month low of $1.3289 struck
the previous day on trading platform EBS.
Against the yen, the euro traded at 119.20 yen <EURJPY=>,
within reach of a one-month low of 118.66 yen hit on Monday.
Negative credit ratings actions are expected given the
costly stimulus packages being implemented by many world
governments at a time when current account balances are under
pressure from weakening exports.
U.S. President-elect Barack Obama on Monday sought the
remaining $350 billion of federal financial bailout funds from
the U.S. Congress, as he seeks ammunition to deal with a "still
fragile" financial system. []
Standard & Poor's revised its outlook on New Zealand's
foreign currency rating to negative from stable on Tuesday
citing in part the government's "sizeable" current account
deficit. The
New Zealand Kiwi tumbling 1.6 percent to $0.5650 <NZD=D4>.
The action follows S&P warnings on Spain, Ireland and
Greence over the past several days. []
Concerns over weakening global demand sent U.S. crude
futures down 32 cents to $37.27 a barrel, extending a $3.24
slide on Monday.
Lower-risk assets perceived as being havens for investors
in tougher times rallied on Tuesday, with government bonds
gaining, sending yields lower.
The benchmark 10-year Japanese government bond yield
<JP10YTN=JBTC> fell 4.5 basis points to 1.240 percent, moving
towards a five-year low of 1.155 percent hit in late December.
March 10-year JGB futures climbed 0.88 point from Friday's
close to 139.80 <2JGBv1>. A rise above 140.15 would take
futures to their highest since mid-September.
However, credit markets are offering a signal that
investors have become more willing to add risk to their
portfolios in the new year.
KEXIM on Monday raised $2 billion in five-year bonds after
pricing the debt with a coupon of 8.125 percent and a spread of
677.7 basis points over equivalent U.S. Treasuries. That
follows Philippines sale of $1.5 billion of new
dollar-denominated debt last week. []
Offshore bond sales from Asia have been largely frozen
since the collapse of investment bank Pehman Brothers in
September.
(Editing by Kim Coghill)
