* Investors face triple threat: banks, inflation, slow
growth
* Bernanke sees downside risks to growth; upside to
inflation
* U.S. dollar stabilises after hitting record low vs euro
By Kevin Plumberg
HONG KONG, July 16 (Reuters) - Asian stocks slipped on
Wednesday as investors grew more pessimistic about global
growth prospects, knocking oil below $140 a barrel.
Companies across the region, such as Toyota Motor Corp
<7203.T>, the world's biggest car maker, and Huaneng Power
International <0902.HK>, China's top electricity provider, have
been lowering their sales and earnings outlook in the face of
slower demand and higher costs.
Federal Reserve Chairman Ben Bernanke said that while the
likelihood is high that the U.S. economy would slow further,
the outlook for inflation had also intensified, providing
little comfort for investors and consumers struggling in
stagflationary conditions. []
Shares in the financial sector mostly fell, though not as
sharply as on Tuesday, on general unease about banks' balance
sheets after the unveiling of a U.S. bailout plan for top
mortgage lenders Fannie Mae and Freddie Mac caused investors to
fear the worst about the health of smaller institutions.
"The macro economy is now facing the prospect of the triple
shock of an extended credit crunch, high inflation and slowing
growth; the very three objectives central bank policy is
designed to overcome," said Sean Darby, chief Asia strategist
for Nomura in Hong Kong.
Japan's Nikkei share average slipped 0.15 percent, touching
a 3-1/2-month low.
Toyota cut its global sales target for 2008 by 3.6 percent,
largely to reflect a sharp U.S. slowdown, according to Japanese
broadcaster NHK, dragging the company's shares down 1.3 percent
and representing the extent to which sluggish growth in the
West has a domino effect on the rest of the world.
The MSCI pan-Asia equity index <.MIAS00000PUS> was down 0.7
percent to its lowest in two years. The Asia Pacific ex-Japan
index <.MSCIAPJ> was largely unchanged on the day, though its
year-to-date losses were 24 percent.
Australia's benchmark index <> edged up 0.2 percent,
boosted by a recovery in shares of the country's banks.
The U.S. dollar stabilised against the euro after hitting a
record low overnight on instability in the U.S. financial
sector.
A sharp drop in oil prices and comments from Bernanke
supported the dollar.
"Bernanke placed top priority in returning the U.S.
financial sector back to normal, which further pushed back rate
hike expectations," said Hideaki Inoue, chief manager of forex
trading at Mitsubishi UFJ Trust Bank in Tokyo.
"But the dollar was not sold as much as otherwise possible
thanks to the lower oil prices," Inoue said.
The euro was largely unchanged on the day at $1.5912 after
climbing to a high around $1.6040 <EUR=>. The dollar recovered
against the yen to trade at 104.83 yen <JPY=>, up 0.2 percent
<JPY=>.
Crude was steady at $138.64 a barrel <CLc1> after tumbling
4.4 percent on Tuesday -- its biggest daily loss since Jan. 17,
1991, when the United States began bombing Iraq in the first
Gulf war.
Japanese government bonds edged down with the benchmark
10-year yield <JP10YTN=JBTC> rebounding from a three-month low
as investors took a breather after a month-long rally, but
lingering concern about the economy limited losses.
(Editing by Kim Coghill)
(Additional reporting by Shinichi Saoshiro in Tokyo)
