* Brent oil nears $103 on Egypt violence
* Nikkei eases after surge; Panasonic weighs
* Greater China markets shut for Lunar New Year holidays
By Vikram S.Subhedar
HONG KONG, Feb 3 (Reuters) - Japanese stocks eased on
Thursday as escalating violence in Egypt prompted investors to
move to safer assets, while commodities extended their recent
gains, underscoring growing inflationary pressures that could
threaten the global economic recovery.
With the onset of long Lunar New Year holidays across much
of Asia and a U.S. payrolls report looming on Friday, investors
took a step back as clashes between Egyptian President Hosni
Mubarak's supporters and demonstrators became increasingly
violent.
Brent crude oil futures approached $103 a barrel as
Mubarak's supporters opened fire on protesters in Cairo in what
many saw as an attempted government-backed crackdown on
pro-democracy demonstrations.
Fears that unrest in Egypt and Tunisia will spread to other
oil-rich countries in the Middle East overshadowed the bearish
effect of soaring gasoline inventories in the United States.
Rising fuel and food prices have exacerbated worries that
high inflation will force policymakers in Asia and other
emerging markets to aggressively tighten policy, putting a
dampener on a key driver of the global recovery.
Higher prices for raw materials are already squeezing
corporate earnings. U.S. candy maker Hershey Co reported
overnight that it was seeing "meaningfully higher" costs for
ingredients such as cocoa and sugar, though productivity gains
and cost savings are helping to support its profit margins for
now.
"While monetary tightening across Asia and EMs (emerging
markets) generally is unlikely to get so aggressive that it
crunches growth, it is still likely to worry investors," said
Shane Oliver, chief investment strategist at AMP Capital
Investors.
The short-term cautious stance on emerging markets is likely
to see shares in developed markets such as the U.S. and Northern
Europe outperform over the next six months, said Oliver.
Japan's Nikkei fell 0.2 percent, after posting its
biggest jump in two months the day before.
Weighing on the index, shares of Panasonic Corp
fell 3.4 percent yen after it posted a worse-than-expected 5.6
percent fall in quarterly profit as tough price competition and
a stronger yen offset help from Japan's incentive scheme for
eco-friendly appliances.
Overall, foreigners remained net buyers of Japanese stocks
for a 13th straight week on optimism that the U.S. and global
recoveries were still gathering strength.
"Foreign buying rose if we look at inflows, but it actually
fell when we consider number of shares bought, indicating that
foreigners have shifted into more expensive, major shares of
exporters as hopes for a pickup in the U.S. economy are on the
rise," Yamagishi said.
U.S. private employers added more jobs than expected in
January, the 12th consecutive month that companies took on
staff, adding to hopes that the American labour market is slowly
recovering and bolstering hopes for the more comprehensive U.S.
jobs report on Friday.
In currency markets, the euro eased from a 2-1/2
month high of $1.3860 against the dollar, though traders
believed the single currencies' uptrend was still intact given
signs of inflation in the euro zone.
Elsewhere in Asia, Australia's main share benchmark
rose 0.4 percent as strong metals prices continued to support
shares of resources firms. Mining giants BHP and Rio
Tinto both tose more than 1 percent as copper prices
stayed near $10,000 a tonne, with supplies tight against strong
demand.
Markets in Greater China, South Korea and much of Southeast
Asia were closed for Lunar New Year holidays.
(Additional reporting by Antoni Slodowski in TOKYO)
(Editing by Kim Coghill)
* For Reuters Global Investing Blog, click on
http://blogs.reuters.com/globalinvesting
* For the MacroScope Blog, click on
http://blogs.reuters.com/macroscope
* For Hedge Fund Blog, click on
http://blogs.reuters.com/hedgehub
