* US Senate struggles for compromise on automaker rescue
* US dollar tries to recover after hitting 7-week low vs
euro
* Exporter, bank shares remain vulnerable in Asia
By Kevin Plumberg
HONG KONG, Dec 12 (Reuters) - Asian stocks fell on Friday,
as the shrinking financial sector, uncertainty over a U.S.
carmaker bailout and economic malaise doused the bargain
hunting that had helped to drive up shares in the last week.
Oil prices slipped for the first time in three days to
trade around $47 a barrel <CLc1> after surging on Thursday on
calls for "severe" production cuts by OPEC's president, while
the U.S. dollar tried to recover from an overnight rout that
knocked it to a seven-week low against the euro.
Fund managers and firms meanwhile stuffed their portfolios
with ultra-safe securities as 2008 wraps up, keeping yields on
short-term U.S. government debt near zero.
Dour comments from the chief executive of JPMorgan <JPM.N>,
a rise in U.S. claims for unemployment benefits to a 26-year
high and news Bank of America Corp <BAC.N> plans to cut up to
35,000 jobs contributed to a feeling of uneasiness among
investors.
"There's growing uncertainty about the U.S. economy, and on
top of this, Asian stocks appear to have been bought up perhaps
a bit too much," said Yutaka Miura, senior technical analyst at
Shinko Securities in Tokyo.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> slipped 1 percent, having advanced nearly 12
percent in the last week. There is also an element of
exhaustion in the market with traders eager to close the books
on 2008, throughout which the index has fallen more than 50
percent.
Japan's Nikkei share average <> fell 1.3 percent,
snapping four days of rises.
Exporters such as Honda Motor Co <7267.T> and Canon Inc
<7751.T> were among the heaviest drags on the index after the
U.S. dollar's overnight decline pushed up the yen.
Hong Kong's Hang Seng index <> was down about 3
percent, weighed down by HSBC's <0005.HK> almost 2 percent
fall.
The benchmark S&P/ASX 200 index for Australian stocks
<> fell 1.5 percent, led by the financial and mining
sectors. Australia's top four banks all fell, led by Westpac
Banking Corp <WBC.AX> which shed 2.4 percent.
The political drama over the $14 billion package of loans
for U.S. automakers, including General Motors Corp <GM.N> and
Ford Motor Co <F.N>, continued. U.S. Republican senators said
the talks were hung up and did not know if a bill would be
possible soon. []
Failure of any of the major car manufacturers could send
shockwaves through a global supply chain and a web of financing
sources and in addition lead to countless job losses.
BONDS FIRM
In the bond markets, U.S. Treasuries extended gains, after
rallying on Thursday on a report showing a spike in jobless
claims that suggested weakness in the labour market is
accelerating at an alarming rate. Employment is usually a
lagging indicator of the broad economy.
The yield on the benchmark 10-year note <US10YT=RR>, which
moves in the opposite direction of the price, slipped to 2.60
percent, edging back down toward the lowest level in more than
50 years hit earlier this month.
Maturities of less than a year traded at barely any yield
at all, with the 3-month bill yield <US3MT=RR> at 1.5 basis
points. Year-end is usually a time when global investors and
corporates pile into the highly liquid short-term U.S. debt
market to keep cash safe and dress up balance sheets.
However, the ferocity of the global economic slowdown this
year has made 2009's prospects particularly grim.
U.S. light crude for January 2009 delivery slipped 85 cents
to $47.13 <CLc1>, but has gained about $7 in the last week.
Remarks from OPEC President Chakib Khelil about the need
for a big cut in production at next week's OPEC meeting fanned
talk that supply may be cut by 1-2 million barrels per day.
Many Asian nations that have fuel subsidies recently cut
domestic prices to reflect much lower market prices, so the
potential supply cut is being watched quite closely.
The U.S. dollar fell broadly on Thursday, undermined by the
market's improved appetite for taking risk in other currencies
again as short term U.S. yields fell closer to zero.
"This put a possibly temporary break to the capital
repatriation trend that has recently boosted the U.S. currency
when stock markets faired poorly. We think the dollar is likely
to recover some ground in the near term," said Dariusz
Kowalczyk, chief investment strategist with CFC Seymour in Hong
Kong.
The U.S. currency has benefited in recent months from a
global deleveraging process that saw investors scrambling to
buy the greenback to repay dollar-denominated loans.
The European single currency fell 0.3 percent to $1.3318
<EUR=> after hitting a seven-week high of $1.3407 on trading
platform EBS on Thursday.
The dollar was steady at 91.45 yen <JPY=> from late U.S.
trading when it hit a seven-week low of 91.16 yen. (Additional
reporting by Elaine Lies in TOKYO; Editing by Dhara
Ranasinghe)
