* Jump in oil to near $140 weighs on stocks
* Euro climbs on expectations for higher interest rates
* South Korea stocks fall 1 pct on labour strike (repeats
to more subscribers)
By Kevin Plumberg
HONG KONG, June 17 (Reuters) - Asian stocks edged lower on
Tuesday after oil prices surged to a fresh record overnight,
fuelling fears that higher inflation will sap consumer demand
and business investment around the world.
Crude jumped to just shy of $140 a barrel before reversing
course to trade around $134 <CLc1>, easing some of the shock
over the sudden rise. Still, investors are worried that food
and energy costs will continue to grow, especially after data
showed euro zone inflation at a new record.
Striking truckers and construction workers protesting
against high fuel costs and low wages in South Korea weighed on
the country's benchmark share index, in a stark example of the
human toll of soaring energy prices.
The U.S. dollar slipped against the euro and yen, as
investors reconsidered the likelihood that the Federal Reserve
would be able to raise borrowing costs with the world's largest
economy still giving mixed signals.
That dampened enthusiasm about a three-day rally in U.S.
tech-sector shares, dragging down Tokyo Electron Ltd <8035.T>,
the second-largest maker of semiconductor equipment in the
world, and Samsung Electronics <005930.KS>.
"Caution is the word," said Peter Vann, head of investment
research at Constellation Capital Management in Sydney. "The
impact of higher petrol prices and interest rates causing a bit
of slowdown in discretionary spending is certainly having an
impact."
Japan's Nikkei share average <> edged up 0.1 percent
after gaining 2.7 percent the prior day.
South Korea's KOSPI <> slipped 0.7 percent, with
shares of companies involved with construction broadly lower a
day after the country's construction workers joined striking
truckers.
Early gains on Taiwan's TAIEX <> fizzled, causing the
index to fall 0.8 percent on losses in technology shares.
Financial sector shares in Japan and South Korea firmed
after results from U.S. brokerage Lehman Brothers Holdings Inc
<LEH.N> did not contain any surprises, giving investors hope
that Goldman Sachs Group Inc <GS.N> and Morgan Stanley <MS.N>
will at least meet expectations when they announce their
earnings later this week.
Lehman had already forecast last week that it would post a
$2.8 billion loss.
The euro rose to an 11-month high against the yen above
167.80 yen <EURJPY=> on expectations the European Central Bank
will almost certainly have to raise interest rates to fight
price pressures.
"Yesterday's inflation print support our expectations that
the ECB will be forced onto a hawkish path for longer than
anticipated, and continued gains in short-term yields will be
supportive for the euro, as hikes even beyond July are
possible," said Ashley Davies, currency strategist with UBS in
Singapore.
The euro rose 0.4 percent against the dollar, at $1.5522
<EUR=>. Against the yen, the dollar slipped 0.2 percent to
107.95 yen <JPY=>, snapping a three-day rally.
(Additional reporting by Geraldine Chua in Sydney)
(Editing by Kim Coghill)
