* Asian shares falls 2 pct, oil slumps on profit-taking
* Regional shares still up over 20 pct from March low
* Euro extends slump on data, Germany's fin min comments
* Key events this week include G20, ECB meeting, US jobs
data
By Rafael Nam
HONG KONG, March 30 (Reuters) - Asian shares and oil prices
retreated on Monday after their recent rallies were seen as
overdone and as investors looked ahead to key events this week
including a meeting of G20 world leaders.
The euro extended losses against the dollar after Germany's
finance minister said on Friday that surging debt levels in the
euro zone could threaten the stability of the single currency.
Investors have been slowly returning to riskier assets on
expectations the ailing global economy may be near a bottom,
and on hopes that a U.S. government plan to cleanse banks of
toxic assets will put the world financial system on stronger
footing.
That wary optimism has helped Asian shares outside Japan
surge more than 20 percent since their 2009 low on March 4 --
meeting the technical definition of a bull market. But opinions
are divided over whether the rally is running out of steam amid
a bleak outlook for corporate profits.
Though global trade remains weak, there are some signs of a
recovery, leading to some optimism ahead of a busy week that
will feature the G20 gathering in London, a policy meeting by
the European Central Bank, and employment data in the United
States.
Data on Monday showed Japan's industrial output fell for a
fifth consecutive month in February but also flagged signs of a
tentative recovery, while South Korea posted its biggest
current account surplus in 11 years due to the weaker won
currency.
"A correction is due but investors' sentiment seems to be
holding up," said Hyundai Securities strategist Y.S. Rhoo in
Seoul.
"If economic indicators due this week are favourable, they
can support the market's recent gains."
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> slumped 2 percent as of 0250 GMT but remains
well up on its March lows.
The index is on course for a near 1 percent gain for the
quarter, which would mark its first quarterly gain since the
three months ended in September 2007.
Still, market conditions remain tough even after a host of
economic stimulus measures have been passed by countries
worldwide, including a mixture of more spending, deep interest
rate cuts and in some cases outright quantitative easing by
pumping more money into banking systems.
The leaders of the world's biggest economies hope to
restore global growth by the end of 2010, the Financial Times
reported on Sunday, quoting a draft communique for a summit
this week. []
Japan's Nikkei <> fell 1.8 percent, though it has
still rebounded some 21 percent since hitting a 26-year closing
low on March 10.
Other major indexes, including in South Korea <>, Hong
Kong <>, Taiwan <>, and Singapore <.FTSTI>, fell about
1-2 percent each.
Among major individual decliners, China's largest aluminium
producer, Chalco <601600.SS> <2600.HK>, slumped 11 percent
after saying on Monday it expected to post a loss in the first
quarter of this year as it worked off stockpiles at a time when
costs remain high. []
EURO EXTENDS FALLS
The euro extended falls after posting its biggest one-day
fall against the dollar in two months on Friday on weak euro
zone data and the Germany finance minister's comments.
[]
Washington is urging European governments to increase
stimulus measures as a way to aid global economic growth, but
some European leaders have instead emphasised the need for more
regulatory reforms.
Spain was forced on Sunday to make its first banking rescue
since the financial crisis began. The government said the Bank
of Spain will bail out regional savings bank Caja Castilla la
Mancha, which has been batted by a slumping property market.
[]
The euro slipped 0.3 percent to $1.3256 <EUR=> after
shedding more than 1.5 percent on Friday. The dollar was 0.3
percent higher at 98.23 yen <JPY=>, after falling nearly 1
percent on Friday, but was still within sight of this month's
four-month high at 99.69 yen.
Oil prices <CLc1> fell 98 cents or nearly 2 percent to
$51.40 a barrel, building on losses of around $2 on Friday.
Expectations of weak near-term energy demand and the
stronger dollar have encouraged investors to take profits on
oil's recent rally which has put crude prices on course for
their biggest monthly gains since October 2007.
"The overall demand outlook, at least in the short term,
continues to look quite bleak. The rally seen in last two weeks
might perhaps have ran its course," said Toby Hassall, head of
research at Commodities Warrants Australia.
"The fundamentals really don't suggest that oil prices
should continue to go upwards. I think we are likely to see
more price correction this week."
