* Fall in U.S. home sales adds to worry about recovery
* Concerns over Europe banks also spur sales of risky
assets
* Nikkei share index slides 1.7 pct
* Hopes for faster appreciation of yuan fade fast
By Nick Macfie
SINGAPORE, June 23 (Reuters) - Asian stocks slid on
Wednesday as an unexpected fall in U.S. home sales added to
worries about the fragility of the global economic recovery and
optimism over China's promise to make the yuan more flexible
faded further.
Japan's Nikkei share average <> fell 1.7 percent,
sliding to a one-week low and back towards a key support level,
while the MSCI index of Asia Pacific ex-Japan stocks
<.MIAPJ0000PUS> was down over 1 percent as investors sold
riskier assets.
Shares of resource firms and banks led the declines on
concerns that global demand could be sputtering, weighing on
commodities prices, but gold miners such as Australia's
Newcrest Mining <NCM.AX> rose 1.2 percent as investors looked
for safe havens from the selling in other markets.
Lorraine Tan, director of Asia equity research at S&P in
Singapore, said many investors were sidelined, worried about a
double dip in the economy. Poor economic data was a reminder
that any global economic recovery is going to be slow.
"At this stage, I don't think there will be a double dip,
but this sluggish growth will last, with little bumps along the
way," she said.
U.S. stock indexes fell as much as 1.6 percent on Tuesday,
hit by the poor housing data and the S&P 500 <.SPX> moving
below its 200 day-moving average, which has been seen as a key
technical support level for the markets' recent rally. []
Sales of U.S. existing homes unexpectedly fell in May,
sparking worries that the Federal Open Market Committee may
offer a less upbeat economic outlook after a two-day meeting
ends on Wednesday. []
While the housing data is volatile, some analysts also
pointed to a dip in German business expectations as weighing on
investor confidence.
Business sentiment rose in June to its highest level since
May 2008, the Ifo think tank said. But a drop in expectations
pointed to a slowdown in the recovery at the end of the year as
the government withdraws economic stimulus measures.
"Ifo underscores a high degree of economic dynamism in the
second and third quarters," said Joerg Lueschow, economist at
WestLB.
"However, the slight worsening in the expectations
component, which should continue in the coming months, points
to a weaker dynamic in 2011. But we don't expect a sharp
downturn."
The dollar <.DXY> and the yen <JPY=> edged higher while the
euro <EUR=> and high-yielding currencies like the Australian
dollar <AUD=D4> were on the defensive as a recent risk rally
appeared to have run its course and the euphoria from China's
new yuan policy waned. The euro was trading around 1.2264 to
the dollar.
Global markets jumped on Monday as China's announcement of
currency reforms raised hopes that a stronger yuan would lift
its purchases of foreign goods and boost the global economy,
but the realisation soon set in that any appreciation would be
slow.
Beijing allowed the yuan to gain nearly 0.5 percent against
the dollar on Monday, but selling by big state-owned banks kept
it in check on Tuesday.
China's central bank set the yuan's daily mid-point
<CNY=SAEC> at 6.8102 against the dollar on Wednesday, slightly
stronger than Tuesday's spot market close but below Tuesday's
mid-point setting. []
Energy shares <.GSPE> were also hit as oil prices fell on
higher U.S. inventories, and after the Obama administration
said it would appeal a court decision which overturned its
moratorium on deepwater drilling in the wake of the Gulf of
Mexico spill [].
U.S. crude for August delivery <CLc1> slid 43 cents to
$77.42 a barrel. Spot gold <XAU=> rose slightly to $1,240.25 an
ounce as investors sought a safe haven.
