* Asia stocks fall for 8th straight day, tech plays hit
again
* Analysts believe fears of China tightening overdone
* But political, regulatory concerns continue to weigh
* Korea stocks, won dip briefly as North, South exchange
fire
* Yen extends gains as investors cut bets on high-risk
assets
(Repeats to more subscribers)
By Kevin Yao
SINGAPORE, Jan 27 (Reuters) - Asian stocks fell for the
eighth straight day on Wednesday on fears that China's
heightened efforts to rein in soaring credit growth could
hamper the global economic recovery.
European stocks were set to follow Asia lower, with
financial spreadbetters expecting key indexes in Britain
<>, Germany <> and France <> to open as much as
0.6 percent lower, while U.S. stock futures <SPc1> were little
changed.
Investors were cautious ahead of the conclusion of a
two-day policy meeting by the U.S. Federal Reserve later in the
day.
The meeting is expected to yield little in terms of a
near-term policy shift. But traders will scour a Fed statement
afterwards for clues on how much longer it may leave its
ultra-low interest rates and easy money policy in place, and
for updates on the health of the U.S. economy.
The meeting is taking place amid a fierce Senate debate
over whether Chairman Ben Bernanke should be appointed for a
second term, which has also weighed on investor confidence this
week.
The euro fell to a nine-month low of 125.31 yen <EURJPY=R>
as investors continued to cut risky trades amid a host of
unsettling factors.
Besides worries that Chinese imports may slow as
policymakers try to keep the economy from overheating,
investors have been plagued by worries about Greece's high debt
levels and a proposal from the White House that could break up
some huge investment banks, which could slash their profits.
Data on Tuesday showed U.S. consumer confidence in January
hit its highest level in nearly a year and a half, but a
closely watched housing index showed an unexpected decline in
November prices, giving a mixed view of its economic recovery.
[
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 1 percent on Wednesday, surrendering brief
early gains. The index has lost around 9 percent in the past
two weeks, nearing the 10 percent level that is typically used
to define a stock market correction.
The index slid 2 percent on Tuesday to its lowest in two
months after China implemented a rise in bank reserve
requirements to curb loan growth.
China's largest bank, ICBC <1398.HK>, said on Wednesday it
has stopped rolling over some loans after a surge in credit at
the start of the year, in the latest evidence that banks may
finally be heeding a government-directed clampdown.
{ID:SGE60Q05X]
Japan's Nikkei average <> fell 0.7 percent to its
lowest in five weeks, while South Korean stocks <> shed
0.7 percent to a seven-week low with sentiment weighed by
reports North and South Korean forces exchanged artillery fire.
[].
Many investors had been pricing in a smoother and stronger
economic rebound this year, which would justify higher share
valuations.
Now that questions are growing about the pace and depth of
a recovery, share prices are highly vulnerable to a correction,
especially after many global indexes have rallied more than 60
percent from lows seen in March last year.
Tech shares, which helped lead the strong global equities
rally over the last year, have been among the hardest hit by
profit taking in recent sessions as investors fear demand for
flat screen TVs and other gadgets may weaken if the global
recovery stumbles.
In Seoul, LG Electronics Inc <066570.KS> fell almost 1.9
percent to an eight-week low after posting a
weaker-than-expected quarterly net profit. Taiwan's tech-heavy
index <> dropped 0.5 percent to a two-month closing low,
after slumping 3.5 percent on Tuesday, on fears that China's
tightening measures will curb the island's exports to the
mainland.
Analysts believe much of the fears over China's tightening
are overdone, saying Beijing will largely stick to a pro-growth
stance even as it tries to head off inflation risks and
boom-bust swings in the economy.
"It is highly unlikely, in my opinion, that Beijing will
drive the economy into a growth recession just to contain
inflation," Stephen Jen, managing director of macroeconomics
and currencies at Bluegold Capital Management, said in a note.
Nevertheless, shares in Shanghai and Hong Kong remained
under heavy pressure.
The Shanghai Composite Index <> fell 1.1 percent,
closing below the key psychological support level of 3,000
points for the first time since October, despite upbeat
earnings estimates from two major banks. Hong Kong's Hang Seng
index <> lost 0.8 percent.
CURRENCIES
The yen <.JPY>, seen as a safer haven in times of market
turmoil, firmed broadly currencies as investors dumped
high-risk assets. The U.S. dollar fell 0.4 percent to 89.25
yen, but rose 0.2 percent against a basket of major currencies
<DXY>.
However, the high-yielding Australian dollar <AUD=D4> rose
to $0.9045 after fourth-quarter inflation rose faster than
expected as the cost of housing, recreation and food all
climbed. [].
The data set the stage for a fourth straight increase in
interest rates by the central bank at a meeting next week.
Gold prices <XAU=> steadied near $1,100 an ounce, supported
by consistent retail demand from Asia, while oil futures prices
<CLc1> fell 10 cents to $74.62 a barrel.
(Reporting by Kevin Yao; Editing by Kim Coghill)
