(Adds European outlook, updates prices)
By Rafael Nam
HONG KONG, March 31 (Reuters) - Asian shares fell on
Monday, posting their worst quarterly performance in over five
years, on persistent concerns about the global credit crunch
and the impact of weakening U.S. consumer demand on the
region's exports.
European shares were also seen falling, though by smaller
amounts, as they headed towards their third consecutive quarter
in the red. []
Prices of oil -- among the top performing asset classes so
far this year -- extended falls from the previous session
following the restart of a crude pipeline system in Iraq, but
other record-setting commodities such as gold steadied.
The dollar climbed against the yen bolstered by
unexpectedly strong demand from Japanese importers and
institutional investors, ending the quarter in which the
greenback has sank in line with the faltering outlook for the
U.S. economy.
"The debt market issue has to be resolved before we get
more clarity on financial stocks and markets generally," said
Greg Goodsell, equity strategist at ABN AMRO in Australia.
"I suspect there are more losses to be written off there."
Asian equity markets have had a tough quarter amid the
prospects of a U.S. recession at a time of rising inflationary
pressures, and a worsening global credit crisis that has led to
billions of dollars in writedowns in the financial sector.
The MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> dropped over 13 percent so far this year,
marking its worst performance since the quarter ended in
September 2002.
The losses have contrasted sharply with the double digit
gains in the index in each of the previous five year. Markets
that soared in 2007 were among the most vulnerable this year,
with Shanghai shares <> dropping over 30 percent in the
first quarter alone.
COMMODITIES SOARED
The MSCI index fell 0.9 percent by 0630 GMT on Monday,
weighed down by the same concerns over the U.S. economy and
financial sector woes that have made for such a poor
performance over the last three months.
U.S. department store operator J.C. Penney Co Inc <JCP.N>
on Friday cut its first-quarter earnings forecast -- setting up
doubts about the health of U.S. consumer demand.
[]
Worries about the health of the financial sector also
continued after Oppenheimer & Co analyst Meredith Whitney said
U.S. banks including Citigroup <C.N> are likely to announce
dividend cuts in April. []
Tokyo shares <.T> fell 2.3 percent, while Shanghai's
benchmark index lost 1.8 percent after rumours last week that
the government would announce market-friendly steps failed to
materialise.
Japanese trading house Marubeni Corp <8002.T> plunged 6.6
percent over news reports that Lehman Brothers <LEH.N> will sue
the company, saying it was defrauded of more than $355 million.
[]
Shares in Hong Kong <> fell 1.9 percent, while indexes
in Taiwan <> and Singapore <.FTSTI> fell less than 1
percent.
Markets South Korea <> and Australia <> ended
slightly higher.
OIL FALLS
The quarter has also been marked by a surge in commodity
prices, as demand continues to outpace supply, while a plunging
U.S. dollar has made the asset classes cheaper for a wide
swaths of global buyers.
The need to hedge against inflation and speculative money
from new funds targeting commodity prices have also been
explained as factors behind the surge in prices.
"We have very strong supply and demand fundamentals. It
takes two, three or four years to build a mine, so you can't
just turn a tap and produce more commodities," said Evy Hambro,
managing director at BlackRock Merrill Lynch Investment
Managers told a news conference in Singapore.
"We expect commodity prices to remain at high levels," he
said. "Supply-side constraints will also continue to support
the price of gold and other commodities."
U.S. crude for May delivery <CLc1> fell 87 cents to $104.80
a barrel on Monday, extending a $2 drop seen on Friday, after
Iraq restarted a crude supply pipeline system eased fears of an
extended export disruption from the country's oil-rich south.
Oil prices hit a record high of $111.80 in mid-March, after
ending 2007 trading at around $60 a barrel.
Gold <XAU=> was steadier at $932.90 an ounce, slightly
higher from late U.S. trade on Friday, but off a record
$1,030.80 on March 17.
The dollar rose against the yen in choppy trade on Monday,
though many market participants were on hold for more clues
about the U.S. economy.
The greenback rose some 0.6 percent to 99.70 yen <JPY=>
from late U.S. trade on Friday, and gained 0.2 percent against
a basket of six currencies <.DXY>.
(Editing by Lincoln Feast)
