* Profit-taking hits Asia shares after hefty Q2 gains
* MSCI Asia ex-Japan eyes biggest quarterly rise in 16
years
* JGB 10-yr yields fall further after spike
(Repeats to additional subscribers)
By Eric Burroughs
HONG KONG, June 18 (Reuters) - Japanese shares fell and
other equity markets struggled on Thursday, with some investors
booking profits in the last days of the second quarter after
big gains scored on signs the global economy is starting to
recover.
Asian stocks outside Japan are up nearly 30 percent so far
in the April-June quarter and poised for their biggest
quarterly gain in 16 years, led by a surge in Hong Kong's Hang
Seng <> and bank stocks such as heavyweight HSBC <0005.HK>.
Analysts remain divided about whether consumer spending in
major economies will kick in later this year and help fuel the
pick up in growth.
But the renewed confidence among portfolio managers has
emboldened them to scoop up shares battered by the crisis last
year as hedge funds were forced to dump assets and the global
economy skidded into its deepest recession in decades.
A monthly poll from Bank of America-Merrill Lynch showed
global fund managers have moved to overweight stocks for the
first time since December 2007, during the early stages of the
crisis that began nearly two years ago.
The poll also found global growth expectations reaching
their highest level in six years. []
Japan's Nikkei average <> shed 1.8 percent. But for
the April-June quarter, the first of Japan's business year, the
Nikkei is still up 19 percent, what would be its largest
quarterly rise since 1995.
"It seems like a pull-back phase. People who want to take
profits are starting to appear," said Koichi Ogawa, chief
portfolio manager at Daiwa SB Investments in Tokyo.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> dipped 0.2 percent. A 0.2 percent gain in the
Taiwan Weighted index <> was offset by a 1.6 percent drop
in the Hang Seng.
For the quarter, the MSCI index has jumped 29 percent, what
would be its biggest quarterly rise since the October-December
period in 1993.
"The global economy will continue to heal itself, albeit at
a gradual pace. The current sell-off in risky assets is
inconsistent with the gradually improving economic
fundamentals," said Stephen Jen, managing director of
macroeconomics and currencies at BlueGold Capital Management, a
London-based hedge fund.
DOLLAR STEADIES
The dollar was little changed and continued to suffer from
the rebound in riskier assets and commodity prices that has
prompted market players to favour higher-yielding currencies
tied to the global economy, such as the Australian dollar.
Doubts about the dollar's status as a reserve currency have
also hurt the greenback.
But leaders from the major emerging economies of Brazil,
Russia, India, China and South Africa refrained from mentioning
the dollar's reserve role in the communique of their inaugural
summit this week, even as Russia pushed the issue.
The dollar index <.DXY>, a gauge of its performance against
six major currencies, was little changed at 80.228 and has
struggled to recover from a seven-month low hit earlier in the
month.
The euro edged up 0.2 percent to 1.3965 <EUR=>, while the
dollar gained slightly against the yen to 95.80 yen <JPY=>.
The dollar has also been hit by the sharp rebound in oil
and commodity prices as investors bet stronger growth will spur
demand for raw materials.
The U.S. currency's 90-day rolling correlations show that
the jump in gold and oil prices is having more of a negative
impact, but changes in short-term interest rates are exerting
little influence.
Government bonds edged up on the dip in most stock markets,
extending a rebound from a sell-off sparked by the sharp slide
in U.S. Treasuries earlier in the month on further signs of
economic improvement and a flurry of mortgage portfolio hedging
against ihgher rates.
Korean bond futures <KTBc1> rose 20 ticks to 109.15 but was
near a seven-month low as the lead contract rolled into the
September future.
Ten-year Japanese government bond yields <JP10YTN=JBTC>
dipped a basis point to 1.450 percent and are down 11 basis
points from an eight-month peak struck earlier in the month on
the slide in Treasuries.
(Additional reporting by Masayuki Kitano in Tokyo; Editing
by Kazunori Takada)
