* Nikkei closes down 1.2 percent
* Profit-taking seen in region
* Gold below record, up 0.7 percent today
By Sugita Katyal
SINGAPORE, April 19 (Reuters) - Asian stocks slid on
Tuesday, falling further from a three-year high hit last week as
investors took profits on risks of a Greek debt restructuring in
Europe and the long-term threat of a U.S. government debt
downgrade.
The euro nursed heavy losses early in Asia while the yen
gained across the board as worries about sovereign debt problems
in Europe and the United States prompted investors to unwind
carry trades.
Standard & Poor's threatened on Monday to downgrade the
United States' prized AAA credit rating unless the Obama
administration and Congress find a way to slash the yawning
federal budget deficit within two years.
S&P slapped a negative outlook on the country's top-notch
credit rating and said there's at least a one-in-three chance
that it could eventually cut it.
The Dow Jones Industrial Average fell 1.1 percent to
12201.59.
Japan's Nikkei stock average fell as much as 1.5
percent after the S&P cut before closing down 1.2 percent at
9,441.03.
Hong Kong's Hang Seng also shed 1.5 percent, then
climbed a bit to be off 1.2 percent. Foreign investors trimmed
holdings they put on in the past few weeks.
Outside Japan, MSCI's index of Asia-Pacific stocks
slipped further away from a nearly three-year
high hit last week. It was down 1.1 percent dragged down by
falls in energy and materials.
The S&P outlook cut "is likely to shift more capital away
from the U.S. and other developed markets towards emerging
markets because in relative terms, emerging markets will look
safer, more atractive, and investors will no longer look at the
US with the same kind of confidence they did in the past,"
Dariusz Kowalczyk of CACIB.
He added that S&P announcement "would be supportive for the
currencies and asset prices throughout the emerging world."
Despite the threat of a S&P ratings cut, U.S. Treasuries
were mostly steady as other concerns, such as falling stock
prices, appeared to trump the outlook revision.
After an earlier sell-off, the 30-year bond was
10/32 higher in price and yielding 4.45 percent, down from 4.47
percent late Friday.
The gap between two-year note yields and 30-year bond yields
briefly hit a recent high of 384 basis points, or the largest
spread since March 17, but it was last at 379 basis points, up
from 377 basis points late on Friday.
Traders and analysts said the S&P threat would likely have
little lasting impact, and even the euro's slide on worries
about Greece seemed more driven by profit-taking after the
euro's rise ran out of steam above $1.45 last week.
The euro fell to as low as 116.41 yen -- the
lowest since March 30. The dollar also underperformed the yen,
falling to a near three-week low around 82.16 , before
recovering slightly to last stand at 82.59.
The Australian and New Zealand dollars slipped on the U.S.
dollar and yen as falling stocks, escalating euro debt woes and
a credit warning for U.S. debt sparked a wave of risk aversion.
The Australian dollar slipped to $1.0465, from
$1.0510 late in New York and a high of $1.0572 on Monday. It
dipped as far as $1.0454 offshore after S&P's warning to
Washington.[].
Spot gold rose as much as nearly 1 percent in early
morning trade, before trimming gains to $1,490.95 an ounce at
0559 GMT, up 0.7 percent. In the previous session, gold reached
a record high of $1,497.20
ICE Brent crude <LCOc1> for June fell 32 cents to $121.29 a
barrel by 0315 GMT. U.S. crude <CLc1> was down 40 cents at
$106.72 a barrel.
The Reserve Bank of Australia (RBA) painted an upbeat
outlook for the local and global economies in minutes of the
April policy-setting meeting released on Tuesday.
* 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
(Editing by Richard Borsuk)
