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By Louise Heavens
SINGAPORE, March 27 (Reuters) - Asian stocks fell more than
1 percent on Thursday as financials slipped on worries over
bank earnings, and the dollar hovered near a record low after a
drop in U.S. durable goods stoked concerns the world's top
economy is already in a recession.
Further signs the U.S. economy is flagging, and worries
that there will be more bank write-downs after a prominent
analyst downgraded four major U.S. banks, were compounded by
inflation concerns as oil prices headed higher, and investors
took refuge in bonds.
Bank shares, such as Japan's Mitsubishi UFJ <8306.T> and
Australia's Macquarie Group <MQG.AX>, were among the biggest
fallers, following the bank downgrades, a profit warning from
Deutsche Bank <DBKGn.DE> and comments from European central
bankers that there was no end in sight to the global credit
crunch. [] []
"It feels like a recession and it smells like a recession,
so we may as well call it a recession," said Eric Betts,
equities strategist at Nomura Australia.
"We've had problems at individual banks before but this
time it seems to be industry-wide. The big worries are the
margin crunch and rise in corporate bad debts," he added.
Tokyo's Nikkei <> fell 1.8 percent by the midsession,
dragged lower by exporters such as Honda Motor Co Ltd <7267.T>
as the stronger yen promised to erode their profits.
MSCI's index of other Asian shares <.MSCIAPJ> fell 1.2
percent by 0235 GMT, taking its losses so far this year to just
under 15 percent.
Seoul's KOSPI <> fell 0.9 percent, Sydney's S&P/ASX
200 index <> shed 0.6 percent, and Taipei's TAEIX <>
dropped 1.9 percent in early trade.
OIL AT $106
Oil traded above $106 dollars a barrel after a U.S.
government report showed larger-than-expected drops in fuel
stocks and declining fuel production in the world's top oil
consumer.
U.S. crude oil futures <CLc1> added 29 cents to $106.21,
while London Brent <LCOc1> traded at $104.40.
The dollar was within striking distance of a record low
versus against the euro after the European Central Bank
president's remark that euro zone rates were at the right level
cooled expectations for a near-term ECB rate cut.
U.S. short-term interest rate futures now indicate
investors see around a 40 percent chance of the Fed cutting
interest rates by 50 basis points in April. A 25 basis-point
rate cut is fully priced. <FEDWATCH>
Against the yen, the dollar traded at 98.75 yen <JPY=>. The
U.S. currency hit a 13-year low of 95.77 yen on EBS early last
week. The euro <EUR=> traded at $1.5803 against the dollar.
Japanese government bond futures were lifted by the
Nikkei's fall and strength in the yen.
June 10-year JGB futures rose as high as 141.03, before
trimming gains to 140.85 <2JGBv1>, a rise of 0.41 of a point on
the day.
The 10-year JGB yield fell 1.5 basis points to 1.260
percent <JP10YTN=JBTC>, edging back towards a three-year low of
1.215 percent reached on Wednesday.
Surging oil and a weaker dollar sent investors to gold.
Spot prices <XAU=> rose to $952/952.80 an ounce.
(Editing by Lincoln Feast)
