* European shares expected to fall for second day
* 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
By Nick Macfie
SINGAPORE, June 23 (Reuters) - Asian stocks slid on
Wednesday and European markets were expected to follow suit as
poor U.S. home sales added to fears about the global economic
recovery and optimism over China's new flexible yuan policy
faded.
Lorraine Tan, director of Asia equity research at S&P in
Singapore, said many investors were sidelined, worried about a
double dip in the global economy. Poor economic data was a
reminder that any 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.
Japan's Nikkei share average <> closed down nearly 2
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 1.3 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 0.8 percent as investors looked
for safe havens from the selling in other markets.
European shares were expected to track Asia and fall for a
second day on Wednesday, with Britain's FTSE <> seen down
1 percent, Germany's DAX <> falling 0.8 percent, and the
French CAC 40 <> slipping 1.1 percent.
The European benchmark FTSEurofirst 300 <> index is
up more than 62 percent from its lifetime low of March 9, 2009,
as major economies return to growth. But it is only up 0.5
percent for 2010, having stumbled in April and May when worries
about debt levels in Europe escalated.
U.S. stock futures <SPc1> rose 0.16 percent.
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. []
U.S. RATES TO STAY NEAR ZERO PERCENT
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. []
The Federal Reserve, in a statement due at 1815 GMT, is
widely expected to hold rates near zero and reiterate its
commitment to keeping interest rates "exceptionally low" for an
"extended period."
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 30 cents to
$77.55 a barrel. Spot gold <XAU=> rose slightly to $1,239.70 an
ounce as investors sought a safe haven.
