* Dlr steady as investors fret about economic recovery
* Asian shares dip, tech shares hit by industry downgrade
* Asian currencies fall as risk appetite weakens
(Repeats to more subscribers)
By Susan Fenton
HONG KONG, Nov 20 (Reuters) - Asian shares slipped on
Friday, but recovered some early losses, while the dollar was
steady after U.S. data raised fears that a global economic
recovery could lose momentum.
European shares, however, were expected to bounce back from
the previous session's sharp drop, while U.S equity futures
<SPc1> were flat.
The dollar <.DXY> held firm against a basket of major
currencies as some investors shifted back to safer assets
despite extremely low yields, while hedge funds were reported
to be taking profits ahead of closing their books for the
year-end.
Investors were unnerved by a report showing that a record
one in seven U.S. mortgages were in foreclosure or at least one
payment past due in the third quarter, signaling a recovery in
the U.S. housing market will be tepid at best. [].
"Hedge funds are cashing out their positions to prepare for
year-end redemption requests from the clients. And that move is
encouraging others to take profits as well," the head of a
trading desk at a big Japanese bank in Tokyo said.
Tech shares suffered some of the heaviest losses after a
U.S. brokerage downgrade of the semiconductor industry, which
helped send the S&P index <.SPX> down 1.3 percent overnight.
The tech sector has been one of the leaders in a strong global
equities rally that has extended into its ninth month. []
Japan's Nikkei index <> slid 0.5 percent, marking a
fourth straight week of losses and its longest negative run in
more than a year, as the government announced the world's
second-largest economy was back in deflation. []
The yen <JPY=>, like the dollar, benefited from demand for
safer assets, adding pressure on shares of Japanese exporters.
They included electronics giant Sony Corp <6758.T>, which slid
2.4 percent to a near four-month low on doubts the company's
new business strategy could deliver strong profit growth.
[]
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> and the Thomson Reuters index of regional
shares <.TRXFLDAXPU> both slipped 0.5 percent, though the Asia
ex-Japan index remains up about 65 percent in the year to date.
In Taiwan, the world's biggest contract chipmaker TSMC
<2330.TW>, which sells the bulk of its chips to North America,
fell 2 percent.
"Unless Christmas sales (of technology products) are very
good, we don't think the market can rebound significantly,"
said Alex Huang, director of Mega International Securities in
Taipei.
RECORD FUND INFLOWS
While some market watchers fear share prices have run up
too far ahead of economic fundamentals, other analysts say the
retreat from equities may only be temporary as excess global
liquidity will continue to encourage fund inflows into Asia.
The region's economies are showing signs of rebounding from
the global financial crisis far faster than the United States,
the UK and Europe, where consumer sentiment remains fragile.
In Hong Kong -- which has attracted record fund inflows of
more than $70 billion since October last year -- central bank
chief Norman Chan warned that rapid inflows posed a dilemma for
policymakers across Asia as they raise the risk of potentially
destabilising asset bubbles.
Even if economies in the region raised interest rates, that
could make dollar carry trades even more active and aggravate
fund inflows, Chan said. []
Carry trades involve borrowing money in a low-yielding
currency and using the funds to invest in other assets which
potentially offer far higher returns.
Fund house Franklin Templeton, meanwhile, told Reuters that
sovereign wealth funds are investing more in property and
commodities to hedge against rising inflation risks stemming
from massive fiscal and monetary stimulus around the world.
[]
Asian currencies also suffered on Friday as investors
retreated from riskier assets, sending the Korean won <KRW=> to
a three-week low at one point at 1,164.2 to the dollar.
Japanese government bond futures hit a fresh seven-week
high as the stock market sagged and were also buoyed by
stronger U.S. Treasuries.
Crude oil futures <CLc1> gained 0.5 percent to $77.87 a
barrel after losing more than 2 percent in New York on fears
that lacklustre economic growth would limit energy demand.
Gold <XAU=> was flat at $1,144.40 an ounce as the dollar
gained ground, retreating after hitting another record at
$1,152.75 an ounce earlier this week.
(Additional reporting by Baker Li in TAIPEI and Satomi Noguchi
in TOKYO; Editing by Kim Coghill)
(susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters
Messaging: susan.fenton.thomsonreuters.com@reuters.net)
