* Nikkei falls 4.8 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
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 slumped to a one-month low against the dollar and
the yen as the European Central Bank looks set to cut interest
rates this week in response to slowing growth, while oil
continued a slump on fears about reduced energy demand.
Still, losses in Asian shares were not as steep as in
previous days, and 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.
European shares were seen edging lower as well.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 0.7 percent as of 0700 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, dashing initial
hopes for a revival in the willingness to add risk.
Concerns over big quarterly losses are now keeping
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 loss in 14 years, while
Toshiba Corp <6502.T> expects a loss of about $2.2 billion
according to Japanese media reports, sending shares in each
down more than 8 percent.
Japanese exporters are being squeezed not only by slower
global demand but also the surging yen. The Nikkei <> fell
4.8 percent, after being closed on Monday for a public holiday.
Meanwhile, weak economic data continues to whipsaw
investors. China's exports and imports fell in December for the
second month in a row, data on Tuesday showed.
Shanghai's main index <> fell 2 percent and Hong Kong
<> fell 1.5 percent. Shares in Australia <> lost 0.8
percent.
But shares in Taiwan <> and India <> rose more
than 1 percent each, while indexes in South Korea <> and
Singapore <.FTSTI> also advanced.
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 interest rates by 50 basis
points to 2 percent on Thurday, according to a Reuters poll.
<ECBWATCH>
The euro dropped 0.7 percent from late Monday New York
trade to $1.3261 <EUR=>, after hitting a one-month low of
$1.3240 on trading platform EBS.
Against the yen, the euro was down 0.6 percent at 118.50
yen <EURJPY=>, from a one-month low of 118.30 yen.
Negative credit ratings actions are expected given the
costly stimulus packages introduced by many world governments
at a time when current account balances are already under
pressure.
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. []
"Concerns about the sustainability of the economic impact
from stimulus plans and the growing fiscal burden worldwide are
surfacing," said Masaki Fukui, a senior market economist at
Mizuho Corporate Bank in Japan.
"The market has become sensitive to bad news such as credit
outlook downgrading, especially with many investors now
considering where they should be repatriating funds from,
instead of investing to."
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 tumbled to one-month lows below
$0.5600 against the dollar. []
The action follows S&P warnings on Spain, Ireland and
Greece over the past several days. []
Concerns over weakening global demand for energy sent U.S.
crude futures down $1.02 to $36.57 a barrel, extending a nearly
8 percent slide on Monday.
Lower-risk assets perceived as being havens rallied on
Tuesday, with government bonds gaining and yields thus falling.
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.
However, credit markets are offering a signal that
investors are 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 at 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 Lehman Brothers in
September.
(Additional reporting by Satomi Noguchi in TOKYO, Editing by
Sonya Hepinstall)
