By Tom Miles
HONG KONG, Feb 28 (Reuters) - Asian shares fell on Thursday
as worries about the sickly U.S. economy were exacerbated by a
falling dollar, which could prop up U.S. firms at the expense
of Asia's exporters.
Prices for commodities from gold to oil remained near
record highs on supply concerns and as investment funds looked
for assets expected to out-perform in an environment of slowing
growth and rising prices.
U.S. Federal Reserve Chairman Ben Bernanke signalled on
Wednesday that he was ready to cut interest rates again to
prevent further damage to the U.S. economy, despite rising
inflation risks. []
Bernanke's comments, coupled with a sharp drop in durable
goods orders and home sales, pushed the dollar to a record low
against the euro <EUR=> on Wednesday.
The euro also gained after European Central Bank Governing
Council Member Axel Weber said expectations of rate cuts
underplayed the risk of inflation.
"The broad dollar weakness will continue, with the
likelihood of the euro hitting more record highs because there
are reasons to buy the single currency after the hawkish
remarks from Weber," said a trader at a big Japanese bank.
The euro remained at around $1.51 on Thursday, while the
Australian dollar <AUD=> hit a 24-year high above $0.9450 and
other Asian currencies including the South Korean won <KRW=>
and China's yuan <CNY=> also firmed.
The yen <JPY=> held below 106.5 to the dollar, denting
exporters such as Toyota Motor Corp <7203.T> and Honda Motor Co
Ltd <7267.T>, which both fell almost 3 percent.
Japan's Nikkei average <> was down 1.5 percent by 0308
GMT, while MSCI's measure of other Asia Pacific stocks
<.MIAPJ0000PUS> was 0.4 percent lower.
GLUM STOCKS
With investors seeing the darker side of the picture, even
healthy business investment figures in Australia
[] served as a harbinger of another rate hike from
the Reserve Bank next week, meaning higher interest costs and
tougher U.S. sales.
Australia's benchmark S&P/ASX2 200 <> slipped 2.3
percent.
Hong Kong's Hang Seng <> fell 0.8 percent, having risen
3.2 percent to 3-week highs on Wednesday, while Shanghai stocks
<> dipped 1 percent.
The return to gloom in equities, which had begun to bounce
back after a miserable January, boosted fixed income assets
such as Japanese bonds, which got an added fillip from weak
Japanese industrial output data. []
March 10-year futures rose 0.61 points to 137.82 <2JGBv1>,
pulling further away from a two-month low of 136.89 struck on
Tuesday.
But the confidence in bonds was matched by a glum reading
of the data for stocks, including the tech sector.
"Output of electronic devices fell sharply, which is a
worrying sign as strength in that sector drove overall output
in the second half of last year," said Yoshiki Shinke, senior
economist at Dai-ichi Life Research Institute.
If February and March turn out as forecast, Japan's output
in the first quarter of 2008 will fall 2.5 percent from the
previous quarter, which would be the biggest quarterly drop
since a 2.6 percent decline marked in the last quarter of 2001,
the Ministry of Economy, Trade and Industry said.
COMMODITIES FIRM
Japanese investors are focusing on how Atsushi Mizuno,
regarded as one of the Bank of Japan's most hawkish board
members, describes the economic outlook when he addresses
business leaders and a news conference later on Thursday.
The slump in the U.S. dollar has also helped lift prices
for commodities and oil, which are dollar-denominated. U.S.
crude oil <CLc1> ticked back towards $100 on Thursday. Oil and
metals have also gained from supply worries.
Shanghai zinc <SZNK8> jumped by its 4 percent daily limit,
rallying after fresh flows of commodity investments drove
London futures up almost 8 percent on Wednesday.
Gold <XAU=> loitered just below a record high of $964.70 an
ounce that it notched up on Wednesday.
(Editing by Lincoln Feast)
