* Asia, U.S., Europe stock markets all in bear market
* Earnings views could change because of stagflation
* Oil slips under $145 but Iran tensions remain
By Kevin Plumberg
HONG KONG, July 7 (Reuters) - Asian stocks fell on Monday
for the seventh consecutive day, on fears stagflation would hit
company earnings and depress consumer spending now that
European, Asian and U.S. equity markets are all in bear market
territory.
Oil prices slipped under $145 a barrel while corn and
soybean prices slid, but with regional stocks persistently down
more than 20 percent from highs touched late last year -- the
common definition of a bear market -- investors sought safety
and stability.
With U.S. aluminium company Alcoa Inc <AA.N> and General
Electric <GE.N> kicking off the earnings season this week,
worries about falling profits weighed.
"What could be the big negative surprise the market has not
yet fully taken into account? We think it might come from the
corporate sector," said Garry Evans, Asia-Pacific equity
strategist with HSBC in Hong Kong.
"The risk of an earnings recession comes looming into view.
We think, therefore, that the bear market still has quite a
long way to go to work itself out," Evans said in a note.
Japan's Nikkei share average <> was down 0.1 percent,
on track for the 12th day of losses, the longest string of
declines since 1954.
Shares in the Asia-Pacific region traded outside of Japan
fell 0.2 percent, according to an MSCI index <.MSCIAPJ>, and
were at their lowest since August 2007 when trouble in the U.S.
subprime mortgage market turned into a full-blown credit
crisis.
Greater China markets outperformed, with the Shanghai
Composite <> jumping 4 percent on hopes the index had
found a floor after bouncing from near its February 2007 low
last week.
Hong Kong's Hang Seng index <> gained 1.3 percent,
helped by banks such as China Merchants Bank
<3968.HK><6013968.SS>, which forecast on Friday its first-half
net profit more than doubled, following a positive earnings
comment from Industrial & Commercial Bank of China on Thursday
<1398.HK>.
South Korea's benchmark index <> fell 0.8 percent,
dragged down by high-profile exporters such as Samsung
Electronics <005930.KS> and Hyundai Motor <005380.KS>.
FX INTERVENTION FUTILE?
The Korean won rose sharply after finance officials starkly
warned of stern measures to boost the currency and try to curb
inflation. []
That attempt was the latest by policymakers in the region
to put a floor under their currencies to relieve upward price
pressures that have been plaguing their countries.
However, some analysts believe the toxic combination of
feeble growth and high inflation known as stagflation, which is
afflicting the region, is too large of a force to beat.
"The best they can hope for, in our view, is to engineer an
orderly decline through a smoothing operation. And maybe
Vietnam cannot even achieve that," said Stewart Newnham,
currency strategist with Morgan Stanley in Hong Kong.
The U.S. dollar was down 0.6 percent against the won at
1042.30 <KRW=>.
The euro fell 0.2 percent against the dollar to $1.5662
<EUR=>, ahead of two speeches from Federal Reserve Chairman Ben
Bernanke, which could reignite expectations for interest rate
rises to curb inflation.
Against the yen, the dollar was largely unchanged at 106.86
yen <JPY=>.
Japanese government bond yields, which move in the opposite
direction of prices, fell, adding to losses incurred last week
on reduced expectations for near-term interest rate rises.
The 10-year yield fell 1.5 basis points to 1.655 percent
<JP10YTN=JBTC>, having declined about 25 basis points since mid
June when global equity markets tumbled.
Crude prices slipped to $143.96 a barrel <CLc1>, although
uncertainty was rife after Iran, the world's fourth largest oil
exporter, reasserted its right to pursue uranium enrichment.
Last week, oil rose to a record high of $145.85 and has risen
about 50 percent so far this year.
(Editing by Lincoln Feast)
