* Worries easy money days are numbered haunt China stocks
* Copper hit after US services sector data disappoints
* Sterling steady ahead of Bank of England meeting
By Kevin Plumberg
HONG KONG, Aug 6 (Reuters) - Stocks in Shanghai dropped 3
percent on Thursday, weighed by speculation China may take more
steps to rein in liquidity, slashing the Australian dollar's
gains, while copper slid from 10-month highs after
disappointing U.S. services data.
U.S. stock futures edged lower as selling of Chinese stocks
picked up and U.S. Treasuries climbed, with investors fearing a
sentiment shift that would trigger corrective moves lower in
risky assets that have had a steep rise in the last five
months.
China's central bank late on Wednesday repeated that
monetary policy will remain growth friendly, sticking with its
view that the recovery was not solid, though said it would use
market tools to fine tune policy after unprecedented loan
growth in the first six months of the year.
"It was very worrisome what happened in the first half of
the year. It looked like all stops were pulled for growth, but
the question remains at the expense of what in the medium to
long term," said Jan Lambregts, head of Asia research with
Rabobank Global Financial Markets in Hong Kong.
"We could do without another equity bubble in China
bursting."
The Shanghai composite index fell 3 percent <> in
whippy trade, though it still remains up 83 percent on the
year.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> slipped 0.2 percent, weighed by weakness in
technology and consumer-related stocks, which have been leaders
throughout the rally. That suggested profit taking was to blame
for broad weakness in Asian equities after the index hit
11-month highs reached on Tuesday.
Japan's Nikkei share average <> rose 0.9 percent, led
by Honda Motor <7267.T> after a report the world's top
motorcycle maker will import bikes from Thailand to sell in
Japan to cut costs.
Camera maker Nikon Corp <7731.T> saw its shares plunge 11
percent and be the biggest drag on the Nikkei, after it warned
of a loss that would be more than double its initial forecast.
[]
In the United States, network equipment maker Cisco Systems
Inc <CSCO.O> chief executive John Chambers sounded a cautious
note on recovery prospects despite giving a revenue outlook
that was in line with Wall Street's expectations.
"If we continue to see these positive trends for the next
one to two quarters, we believe there is a good chance we will
look back and see that the tipping point occurred in Q4,"
Chambers said.
"While this is a very important trend, I would want to see
the sequential trends continue for several more quarters before
we'd be comfortable with saying that we are returning to normal
business momentum," he told analysts on a call.
In currency markets, the Australian dollar briefly was
lifted to the day's high after surprisingly strong jobs figures
in Australia.
However, it gave up its gains and traded flat at US$0.8411
<AUD=> as the Chinese stock market tumbled.
Australian employment increased by 32.000 jobs in July,
surpassing forecasts for a 20,000 drop. That fueled
expectations that Australia's central bank will be the first
among the Group of 10 countries to raise interest rates.
Sterling was slightly lower at $1.6967 <GBP=> as investors
waited to see if the Bank of England boosts its planned asset
purchases at a policy meeting later in the day.
Copper prices traded in Shanghai fell 2 percent and
three-month copper on the London Metal Exchange <MCU3> slid 2.9
percent to $6,020 a tonne, as weak U.S. data for the services
sector raised concerns about the pace of recovery.
A gauge of the U.S. services sector, which makes up the
sheer majority of the economy, surprisingly reflected weakness
in July, contrasting with upbeat manufacturing and investment
readings.
(Editing by Kazunori Takada)
