By Tom Miles
HONG KONG, April 22 (Reuters) - Asian shares fell on
Tuesday as investors flinched at yet more bad news from the
banking sector and an oil price creeping towards a record $118
a barrel.
Investors hoping for a glimmer of recovery took solace from
a supportive plan from the Bank of England on Monday but that
optimism was shredded by bleak results from Bank of America
Corp <BAC.N>, the biggest U.S. retail bank, and likely capital
raising by British banks, led by Royal Bank of Scotland
<RBS.L>.
Bank of America missed market forecasts with a 77 percent
drop in quarterly profit and said the effects of the housing
slump may take the rest of 2008 to work out [].
U.S. regional bank National City Corp <NCC.N>, which posted
a quarterly loss, slashed its dividend and said it was raising
$7 billion in capital [].
Asian banking shares such as National Australia Bank Ltd
<NAB.AX> fell, 1.5 percent by 0133 GMT, dragging Australia's
S&P/ASX 200 index <> down 0.8 percent after it rose more
than 3 percent to a two-week closing high on Monday.
"The whole stock market is twitchy, the financials in
particular, because of the uncertainties going forward of how
the economy and bad debts are going to go," said Peter Vann,
head of investment research at Constellation Capital
Management.
"Some of the U.S. banks are definitely going to have some
large losses or a considerable reduction in profits because of
all the riskier activities."
Japan's Nikkei average <> fell 1.1 percent, led by
blue chips such as Honda Motor Co Ltd <7267.T> and Canon Inc
<7751.T> as investors locked in profits after a five-day
winning streak.
Top broker Nomura Holdings Inc <8604.T> fell 3.8 percent on
news of an insider-trading probe []
MSCI's measure of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> was 0.4 percent lower.
There was no let up for fuel-dependent producers as oil
prices stayed close to a record high of $117.83 a barrel, hit
on Monday after rebel attacks cut Nigerian supplies and a
Scottish refinery strike threatened North Sea crude production.
U.S. light crude <CLc1> held steady at around $117.48 a
barrel and London Brent crude <LCOc1> was at $114.50.
In Seoul, shares in some Samsung Group units fell after
chairman Lee Kun-hee, indicted last week for tax evasion, said
he was quitting his post at South Korea's largest conglomerate.
In a major reshuffle, Samsung is to dismantle its powerful
strategic planning office, which critics say is an opaque
organisation wielding influence across dozens of affiliates,
including Samsung Electronics <005930.KS>, a world leader in
computer memory chips.
MORE BAD BANK NEWS
More bad news from banks could be on the way, with
Britain's RBS set to announce Europe's biggest-ever rights
issue and over $10 billion of losses on investments, which
could see other British banks follow suit.
As pressure grows on the world's largest lenders to shore
up balance sheets battered by the credit crunch, Britain's
second-biggest bank will seek to raise up to 12 billion pounds
($24 billion), people familiar with the matter have said.
The Bank of England unveiled a plan on Monday to swap
banks' risky mortgage assets for at least 50 billion pounds
($99 billion) of government debt. []
The stock market's weakness and worries about the banks'
health added to the appeal of Japanese government bonds. June
10-year futures <2JGBv1> were up 0.07 point at 138.11.
"These developments show it is still too early to remove
credit market concerns, and offer opportunities for investors
to buy on dips," said Mari Iwashita, a senior market economist
at Daiwa Securities SMBC.
But bond investors took a cautious approach, mindful that
the U.S. Federal Reserve is widely expected to cut interest
rates again at its meeting next week while monthly jobs data,
also due next week, may underscore the weakness in the U.S.
economy.
"Not many investors have the strength to take huge risks by
betting on a direction, so their cautious stance keeps trading
in ranges, especially before the Fed and the jobs data," he
said.
The dollar weakened after the Bank of America result and
remained depressed in Asian trade, trading at 102.83 yen
<JPY=>, having fallen from a seven-week peak of 104.66 yen last
week.
The euro also gained after European Central Bank Governing
Council member Klaus Liebscher said there was no reason for
pessimism on eurozone growth, suggesting the ECB would keep
rates at a six-year high of 4 percent for a while.
[]
"Investors feel more comfortable picking up the euro thanks
to its yield advantage over the dollar," said Hiroshi Yoshida,
a forex trader at Shinkin Central Bank. "It's only a matter of
time before the euro hits the key $1.6 level as investors
believe there are fewer risks in buying the euro."
The euro was steady from Monday's late U.S. level at
$1.5918 <EUR=>, not far from last week's record high of
$1.5985.
(Additional reporting by Geraldine Chua in SYDNEY, Rika Otsuka
in SYDNEY, Editing by Ian Geoghegan)
