(Repeats to more subscribers)
* Stagflation fears override recovery hopes
* Crude oil surges to fresh record above $144
* Wall St joins Asia stocks in bear market
By Kevin Plumberg
HONG KONG, July 3 (Reuters) - Asian stocks slumped on
Thursday on signs of further deterioration in the U.S. economy,
fresh record highs for oil prices and fears that stagflation
will continue to damage company earnings and consumer spending.
Japan's Nikkei share index fell for the 11th consecutive
day, on track for the longest losing streak in a half century,
after the Dow Jones industrial average <> sank into bear
market overnight, closing more than 20 percent below its
October peak.
The dollar fell to a two-month low against the euro <EUR=>
after a report on Wednesday showed U.S. private employers cut
the most jobs in nearly six years.
The euro, by contrast, was supported by expectations that
the European Central Bank will later in the day raise its
benchmark interest rate for the first time in a year.
Investors will focus on whether ECB policymakers there will
drop any hints that more borrowing costs will have to rise
further to fight inflation despite a global economy that is
growing below its long-term trend. []
Markets are also awaiting U.S. non-farm payroll data later
in the day.
"Sentiment is simply very bad. There's just way too much
uncertainty about where things go from here," said Yutaka
Miura, senior technical analyst at Shinko Securities in Tokyo.
Weakness was by no means unique to Japanese stocks in the
midst of a toxic mix of rising inflation and slowing growth
known as stagflation.
The MSCI index of Asia-Pacific shares <.MSCIAPJ> traded
outside of Japan fell 1.2 percent to the lowest since a blowup
in the U.S. subprime mortgage sector turned into a global
credit crisis 10 months ago.
Australia's S&P/ASX 200 index <> fell more than 2
percent to a 21-month low, weighed down by the mining sector on
concerns that slowing global economic growth will hurt demand
for commodities and following a slump in coal prices.
BHP Billiton Ltd , the world's top miner, dropped 5.8
percent to A$40.42, while its main rival and takeover target,
Rio Tinto Ltd , shed 5.4 percent to A$125.17.
Seoul shares >KS11> fell 1.8 percent and Hong Kong's Hang
Seng Index <> was set to open down 1.5 percent.
"Foreigners are continuing to offload shares, and local
institutions and retail investors have joined the selling spree
as panic spreads in the market," said Juhn Chong-kyu, a market
analyst at Samsung Securities in Seoul.
The euro rose as high as $1.5893, the highest since late
April and edging closer to an all-time peak of $1.6020 that was
also hit in April.
The dollar stood at 105.86 yen <JPY=>, little changed from
late New York.
"Reasons to sell the dollar are lined up," said a trader
for a Japanese trust bank.
U.S. crude prices continued their relentless rise, climbing
to a record $144.44 a barrel <CLc1> in early Asian trade, up 50
percent this year as tensions grew between Israel and the
world's fourth largest oil exporter Iran and supply fears
boiled over.
Gold, often used by investors as a hedge against rising
inflation, was relatively steady at $942.85 <XAU=> an ounce
after hitting a two-month high of $944.35 on Wednesday.
Japanese government bonds edged lower as caution prevailed
before a key auction.
Bond dealers are bracing for a 1.9 trillion yen ($17.95
billion) auction of 10-year paper, with results due at 0345
GMT.
September 10-year futures slipped 0.01 point to 134.67
after rising earlier to 134.87 in response to the overnight
gains in U.S. Treasuries.
The benchmark 10-year yield rose 1.5 basis points to 1.670
percent.
(Editing by Kim Coghill)
