By Kevin Plumberg
HONG KONG, May 21 (Reuters) - Asian stocks fell for a
second consecutive day on Wednesday, feeding a rally in
government bonds, as fears about consumer demand in the face of
high oil prices rattled investors.
U.S. light crude climbed to a record $129.60 a barrel on
Tuesday, driven by concerns about dwindling global stockpiles.
Its rise was given added impetus by a prediction from
billionaire investor T. Boone Pickens that the price could hit
$150 a barrel in the next six months.
Printer and copier maker Canon Inc <7751.T> and chip
producer Advantest Corp <6857.T> led Japan's Nikkei share
average down 1.9 percent, or 263.84.53 points, to 13893.74
after Wall Street tumbled overnight on disappointing earnings
from U.S. retailers, which fuelled concern about a slowdown in
demand.
A second day of strength in the yen also weighed on
Japanese exporters and dragged the broad TOPIX <> down 2.4
percent, on track for the largest daily decline in a month.
By 0114 GMT, the MSCI index of Asian stocks excluding Japan
<.MIAPJ0000PUS> had slid 0.5 percent to 494.18 after hitting a
four-month high on Monday.
South Korean stocks fell 0.8 percent to 1858.72 as negative
sentiment spread across the region, especially after news that
core U.S. producer prices in April had their biggest annual
gain since December 1991.
"It appears that the market's fear has materialised in hard
numbers, and sentiment will definitely be heavy today," said
Kim Seung-han, a market analyst at CJ Investment & Securities
in Seoul.
"Oil prices and inflation have come up as the next big
worry in the market, and the index will continue to be sluggish
unless we see some stabilisation on this front," Kim added.
With growing uncertainty in financial markets about the
outlook for the global economy, investors turned to the
relative safety of government bonds.
Japanese government bond (JGB) futures rebounded from a
seven-month low plumbed last week as investors became fearful
that soaring oil prices would hit corporate profits and
heighten the risks to the domestic economy.
"The theme of the market could shift back to the economic
slowdown and credit crunch," Eiji Dohke, chief JGB strategist
at UBS Securities, said in a note to clients.
June 10-year JGB futures <2JGBv1> were up 0.37 point at
135.84 <2JGBv1> after jumping as high as 136.09 early in the
session.
The benchmark 10-year yield <JP10YT=RR>, which moves
inversely to the price, dipped 3 basis points to 1.610 percent,
well off a seven-month high of 1.710 percent hit on Friday.
Overnight gains in U.S. Treasury bonds also helped. The
benchmark 10-year Treasury yield was at 3.7765 percent, down
from 3.7803 percent on Tuesday and 14 basis points lower than a
week ago.
However, South Korean government bond yields rose after the
country's finance ministry revived fears about possible
measures to curb short-term external borrowing.
The U.S. dollar slipped against the euro ahead of the Ifo
index of German business sentiment for May due later in the
day.
The euro was up 0.2 percent at $1.5676, near a three-week
high of $1.5685 touched earlier in the morning. The New York
Board of Trade's U.S. dollar index fell to a one-month low of
72.304.
Gold, which is often used by investors to hedge against
inflation, rose to a one-month high above $920 an ounce.
(Editing by Alan Raybould)
