* Focus on Lehman results due ahead of U.S. market open
* Oil up towards $104 on effective OPEC output cut
* Fannie, Freddie relief effect wears off
By Kevin Plumberg and Vidya Ranganathan
HONG KONG/SINGAPORE, Sept 10 (Reuters) - Asian shares fell
about 1 percent and U.S. Treasuries dipped on Wednesday on
fears about Lehman Brothers' ability to raise capital,
demonstrating Washington's bailout of Fannie Mae and Freddie
Mac this week had not fixed the credit crisis.
Oil prices rose above $103 a barrel from a five-month low,
after OPEC agreed to a small but unexpected product cut.
A retreat in oil prices from a record high in July has
supported the U.S. dollar, which hit an 13-month high against
the euro <EUR=>.
While the U.S. government bailout of its top mortgage
finance companies on Sunday removed a big risk of a system-wide
failure, problems at other financial institutions were painful
reminders of how severely an avalanche of bad loans has
threatened almost every major economy.
Shares of firms such as Macquarie Group Ltd <MQG.AX>,
Australia's largest investment bank, fell 1.3 percent after
Lehman's stock <LEH.N> plunged 45 percent overnight on fears it
would not be able to raise the funds it needs to survive.
European equities were set to fall, with futures for the
Eurostoxx 50 <STXEc1>, Germany's DAX <FDXc1> and the French CAC
40 <FCEc1> down between 0.4 and 0.6 percent.
Lehman reports its quarterly results ahead of the U.S.
stock market open.
"Today's fall is a Lehman shock," said Yoku Ihara, manager
of the investment information department at Retela Crea
Securities. "We thought the market would rebound after the
Freddie and Fannie news, but Lehman rekindled worries."
The Wall Street Journal reported Lehman was in talks with
investment firm Blackrock Inc <BLK.N> to sell a package of
British residential real estate assets and was looking at
spinning off some commercial property assets. []
A South Korean government official said state-owned Korea
Development Bank (KDB) had ended talks on a possible investment
in Lehman, but state news agency Yonhap quoted an unnamed
official as saying KDB was seeking management rights in Lehman
for around $6 billion.
The dollar extended its gains against the yen after the
report and rose 0.36 percent to 107.22 yen <JPY=>.
The Asia-Pacific index of shares traded outside of Japan
was 1 percent lower <.MIAPJ0000PUS>, moving back towards
Friday's 22-month low.
Tokyo's Nikkei share average <> pared losses to 0.4
percent after briefly touching a six-month intraday low
earlier.
Australia's benchmark S&P/ASX 200 index <> lost 1.5
percent, led by shares of miners BHP Billiton <BHP.AX> and Rio
Tinto Ltd <RIO.AX>.
Hong Kong's Hang Seng index <> dropped 1.5 percent.
Worries about the prospect of another U.S. bailout for
Lehman Brothers dragged U.S. Treasuries, with 10-year yields
rising almost 6 basis points. Japanese bonds initially gained,
but the September 10-year JGB futures soon was trading nearly
flat at 136.94 <2JGBv1>.
The euro was also listless ahead of the Lehman results,
trading nearly steady at $1.4135 <EUR=>, nearly 20 cents lower
than where it was in mid-July when crude prices peaked.
DOLLAR BEARS
A combination of falling commodity prices, a desire to
avoid risk taking and signs of economic gloom spreading to
Europe and Japan have all pushed the dollar higher for the last
two months.
However, some fund managers are holding fast to their
long-term negative view on the U.S. currency. Even the
excitement over the Fannie <FNM.N> and Freddie <FRE.N> bailout
seemed to have all but evaporated.
"The bail-out honeymoon already appears to be over. Risk
aversion was back with a vengeance...," Rabobank said in a note
to clients.
V. Anantha Nageswaran, a strategist with Julius Baer, said
the bailout and the rally it spurred in risk assets were like
"comic interludes" in a long-drawn deleveraging process.
"A new risk cropped up and they addressed that new risk.
That doesn't mean the underlying risk went away, which is that
the shrinking of household and financial sector balance sheets
is a multi-year process," Nageswaran said.
While gauges of investors' distaste for risk taking have
fallen from mid-July highs, they have risen steadily so far in
September. The so-called TED spread of 3-month borrowing rates
among large banks over the 3-month U.S. Treasury bill yield
widened to the most since July 23 on Wednesday.
(Additional reporting by Aiko Hayashi in TOKYO, editing by
Lincoln Feast and Anshuman Daga)
