(Updates with latest Asian share prices, oil)
By Rafael Nam
HONG KONG, June 23 (Reuters) - Asian stocks tumbled to
multi-month lows on Monday on fears that more bad news could be
lurking in the global financial sector, and as oil prices
climbed above $136 a barrel on escalating tensions in the
Middle East.
Inflation concerns at a time of slowing global economic
growth and financial sector woes continues to dampen the mood.
World energy powers met for an emergency session at the weekend
in Jeddah, Saudi Arabia, but had no quick fix to crude prices
that have doubled over the past year. []
The prevailing uncertainty kept the dollar rangebound, but
lifted most Asian bonds, with exceptions such as in India and
South Korea. Investors were also on hold for the U.S. Federal
Reserve's policy setting meeting that begins on Tuesday and
could give further clues as to U.S. interest rates.
"It is not domestic, it's the continued pain that larger
banks are having to confront in the U.S.," said Jamie Spiteri,
senior dealer at Shaw Stockbroking.
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> fell 0.8 percent, after dropping at one point
to its lowest since March 25. The index has fallen for five
straight weeks and is down more than 17 percent this year.
The losses follow a weak session in Wall Street on Friday,
which saw the Dow Jones industrial average <> fall to its
second-lowest level this year, as expectations that U.S.
financial firms will need to raise more capital triggered a
guessing game about who will be next.
Global lenders remain under pressure, with Citigroup <C.N>,
the largest U.S. bank, set to slash 6,500 jobs in its
investment bank division, the Wall Street Journal said.
[]
The financial crisis has set into motion more U.S.
regulatory scrutiny as well. Another Wall Street Journal report
said the Fed and the U.S. Securities Exchange Commission were
finalising an agreement to start the process of redrawing how
Wall Street is regulated. []
Tokyo's Nikkei average <> dropped 1.1 percent, led
down by blue-chip exporters such as Toyota Motor Corp <7203.T>
and financial firms such as Mitsubishi UFJ Financial Group
<8306.T>.
Japanese firms' sentiment on business conditions hit a
four-year low in April-June as commodity-driven inflation and a
dim global outlook took their toll. []
South Korean shares <> also fell 1.1 percent, hitting
at one point their lowest level in 12 weeks, while stocks in
Taiwan <> touched a four-month low.
Shares in Shanghai <> fell 1.6 percent after the
central bank warned monetary policy might need to be tightened
to fight inflation following last week's hike in domestic fuel
prices.
Shares in Australia <>, Singapore <.FTSTI>, Taiwan
<> and Hong Kong <> were down less than 1 percent.
OIL CLIMBS
U.S. crude futures <CLc1> rose more than $1 to $136.42 a
barrel by 0425 GMT, reversing initial losses early on Monday,
as tensions between Israel and Iran and a weak dollar continue
to bolster prices that had already gained nearly $3 on Friday.
Prices cooled earlier as Saudi Arabia's willingness to
increase oil output was restated in Jeddah over the weekend,
while Nigerian militants announced a ceasefire.
"The market took the opportunity to take profits earlier on
Saudi Arabia's promise to pump more oil, but realistically that
alone is not enough to calm the market," said Mark Pervan,
senior commodities analyst at Australia and New Zealand Bank in
Melbourne.
"The short-term situation is still very tight and tensions
between Iran and Israel are back in focus."
Gold <XAU=> rose about $3 an ounce to above $904.
The dollar was little changed from late U.S. trading on
Friday at 107.31 yen <JPY=>, or well below a 4-month high of
108.59 yen hit last week.
The euro edged up 0.1 percent to $1.5624 <EUR=>, supported
by expectations that the European Central Bank will raise
interest rates by a quarter percentage point to 4.25 percent in
July.
On the other hand, U.S. interest rates are widely expected
to be kept steady at 2 percent this week, though investors will
focus primarily on the central bank's statement.
Most Asian bonds gained as investors sought safety from the
stock losses, but an exception was India, where the 10-year
federal bond yield <IN082418G=CC> rose to the highest in nearly
seven years as traders braced for a central bank policy
response to calm inflation.
South Korean government debt tumbled as well on a newspaper
report the Bank of Korea was planning to raise reserve
requirements to curb hefty money supply growth, though the
central bank denied this. []
