(Adds markets, quotes, updates prices)
By Louise Heavens
SINGAPORE, May 8 (Reuters) - Oil's relentless push to yet
another record high pressured Asian shares across the board on
Thursday, raising fears that inflation -- and central bank
measures to cool it -- would hurt consumer spending and
profits.
The euro slumped to a two-month low against the dollar as
weak euro zone retail sales figures on Wednesday sparked
concern about the region's economy ahead of a European Central
Bank meeting later on Thursday.
Also weighing on the euro was a Financial Times article
that said the United States and Europe now have a united desire
to see the dollar strengthen against the European currency,
some traders said.
The rising dollar put pressure on gold <XAU=> and
industrial metals as they became more expensive in other
currencies.
U.S. crude <CLc1> was steady at $123.52 in Asia at 0330
GMT, holding close to a record $123.93 hit several hours
previously.
Oil prices have doubled in a year and risen sixfold since
2002 on rising demand from China and other developing
countries, adding pressure to economies already hit hard by a
housing and credit crunch and rising food costs.
Crude rose despite news of a large increase in U.S. crude
inventories.
The advance came a day after investment bank Goldman Sachs
said oil prices could scale $200 a barrel in the next two years
as part of a "super spike" in the market.
The head of National Oil Corp, a state-run firm in OPEC
member Libya, said oil prices would likely rise further amid
continued investor interest in commodities and simmering global
political tensions. []
Stocks in Asia took their cue from Wall Street's tumble
overnight, where a drop in shares in banks, home builders and
companies dependent on consumer spending sent the Dow Jones
industrial average <> down 1.6 percent.
Tokyo's Nikkei average dropped 0.9 percent by midsession,
with banks, such as Mitsubishi UFJ Financial Group <8306.T>,
among the biggest fallers.
"The tumble in New York contributed to the fall here, but
what's more important is that Japanese stocks have become
rather expensive in terms of valuations," said Norihiro Fujito,
general manager of the investment research and information
division at Mitsubishi UFJ Securities.
"The Nikkei average's expected price-earnings ratio was
16.5 times yesterday, compared to about 16.6 times in Hong Kong
and 17.7 times in India. Do you think investors would want to
buy Japanese stocks, considering their valuations level, just
as they would Indian and Chinese stocks?"
Shares across the rest of Asia <.MIAPJ0000PUS> fell 0.6
percent. The benchmark is down around 7.7 percent so far this
year.
Stock indexes Seoul <>, Singapore <.FTSTI>, and Taiwan
fell between 0.1-1.2 percent.
Shares in Hong Kong <> dipped 0.3 percent as oil
producers, such as CITIC Resources <1205.HK> benefited from
sky-high crude oil prices, but airlines, including Air China
<0753.HK> slid as much as 5 percent.
In contrast, shares in Sydney bucked the trend, helped by
banks turning positive ahead of the results season.
The euro fell to $1.5285 <EUR=>, below a trough hit last
Friday when U.S. data showed companies cut fewer workers than
expected in April. The dollar traded at 104.30 yen <JPY=>.
The ECB is expected to keep interest rates steady at 4
percent later on Thursday because inflationary threats remain
its main concern. But traders said recent weak data suggested
the central bank may have to lower rates before the end of the
year. []
Sterling hovered near an 11-week low of $1.9503 hit on
Wednesday after weak consumer sentiment and jobs data. The Bank
of England reviews policy later in the day and is also expected
to leave its rates unchanged at 5 percent.
The 10-year Japanese government bond yield hovered at a
7-month high at 1.665 percent.
June 10-year JGB futures edged up 0.06 of a point to 135.53
<2JGBv1>.
