(Updates with European outlook, fresh prices, quotes)
By Tom Miles
HONG KONG, March 5 (Reuters) - Asian shares mostly fell on
Wednesday, as fear of impending U.S. and Japanese recessions
and efforts to cool overheating economies in China, Vietnam and
Australia weighed.
European stocks were expected to put in a better
performance after a five-day decline, with financial bookmakers
predicting gains of half a percent or so for major indexes in
London <>, Frankfurt <> and Paris <>.
The dollar steadied near record lows, and markets for oil,
gold and other metals also paused for breath after prices
surged unchecked for almost a month.
Traders waited to see if the commodities boom would resume
or falter, with slowing U.S. growth and easing supplies weighed
against hot Asian demand.
In China, the motor of the commodities boom over the last
two years, Premier Wen Jiabao used his annual state of the
nation report to warn parliament of the dangers of supercharged
growth.
"The current price hikes and increasing inflationary
pressures are the biggest concern of the people," Wen told
nearly 3,000 deputies of the National People's Congress.
[]
Fear of economic overheating has also been mobilising
China's communist neighbour Vietnam, where the Ho Chi Minh
Stock Exchange index <> has tanked amid government efforts
to soak up liquidity. The index fell more than 4 percent on
Wednesday and is the world's worst performing this year, down
37 percent.
"The government is doing the best it can to turn this
around because it's getting super ugly," said Robbie Davis,
head of proprietary trading at VinaCapital.
Booming growth has also troubled central bankers in
Australia, where investors fear rising interest rates will take
a bite out of company profits and hurt banks.
Australian bank stocks like Westpac Bank <WBC.AX> started
well, cheered by talk of a rescue plan for U.S. bond insurer
Ambac Financial Group Inc <ABK.N> and hopes Tuesday's domestic
rate rise would be the last for a while, but turned negative as
worries about credit markets and a U.S. recession crept back.
The benchmark S&P/ASX 200 index <> ended down 0.1
percent, contributing to a 0.6 percent fall in MSCI's index of
non-Japan Asia, which is down 12 percent this year.
Japan's Nikkei average <> closed down 0.2 percent.
DOLLAR STAYS WEAK
China's Shanghai Composite <> was down 1.9 percent but
Taiwan's main TAIEX index <> shrugged off the pessimism to
rise 0.2 percent, closing at its highest in more than two
months, with buyers hoping that a presidential election on May
22 would open the door to more business with China.
"Investors are buying up selected stocks from all sectors
which could see big gains from a post-election rally, but the
looming concern is still the status and health of the U.S.
economy," said Paradigm Asset Management President Kevin Yang.
The dollar, which has plunged almost 5 percent against the
yen <JPY=> in a week, stabilised at about 103.4 yen as traders
looked for more signs of a U.S. recession ahead of the week's
most anticipated data release, Friday's U.S. payrolls figures.
One signpost due later on Wednesday is the Institute of
Supply Management's (ISM) index of service sector activity.
"If we see a weak ISM reading and then weak jobs figures
later in the week, we could see a push in the dollar/yen
towards 100 yen," said Hideki Amikura, a forex manager at
Nomura Trust and Banking.
Fear of a U.S. recession is echoed by worries about growth
in Japan, where fourth quarter corporate capital spending data
on Wednesday showed a 7.7 percent drop, the biggest fall in
five years. []
"Rising raw material prices hurt manufacturers' earnings,
while slack domestic demand, slow sales and the negative impact
of tighter construction rules hit non-manufacturers," said
Naoki Iizuka, a senior economist at Mizuho Securities.
The growth worries drove up demand for Japanese government
bond futures. March 10-year futures <2JGBv1> rose 0.30 points
to 138.74, nearing a one-month high of 138.93.
Equity buyers also took some heart from a modest correction
in oil, which fell below $100 a barrel on Tuesday for the first
time in three days after recession fears resurfaced and traders
anticipated data due later on Wednesday would show U.S. oil
inventories rising.
U.S. crude oil <CLc1> was 22 cents higher at $99.74 and
gold prices <XAU=> held steady at $964.50/5.30 after tracking
the reversal in oil.
(Additional reporting by Jason Subler and Simon Rabinovitch
in BEIJING, Grant McCool and Nguyen Nhat Lam in HANOI, Sheena
Lee in TAIPEI; Naomi Tajitsu and Yoko Nishikawa in TOKYO;
Editing by Lincoln Feast)
