* Stocks down 3.3 pct, poor US retail sales data dents
rally
* Drop in HK futures open interest suggests profit-taking
* Dollar index up from 4-mth low, but technical outlook
poor
* Eye on Indian election results, coalition building
By Eric Burroughs
HONG KONG, May 14 (Reuters) - Asian stocks fell on
Thursday as weak U.S. retail sales underscored the long road to
economic recovery, prompting investors to take profits on
winning bets in equities, higher-yielding currencies and
commodities over the past two months.
The retreat in Asian shares tracked an overnight drop on
Wall Street after retail sales unexpectedly fell in April,
suggesting that consumers were still struggling from job
losses, falling home prices and tighter credit.
Futures on Britain's FTSE 100 <FFIM9> were up 0.5 percent
in early trade, while futures on Germany's DAX <FDXM9> wer
little changed.
"U.S. retail sales point to a continued slump in the
world's largest economy," said Y.S. Rhoo, a market analyst at
Hyundai Securities in Seoul.
The dollar edged up from a four-month low hit the previous
day as investors had gradually shifted funds away from the
safe-haven U.S. currency and into riskier assets. Oil prices
pulled further away from a six-month peak reached this week.
Analysts said markets were likely seizing on the poor U.S.
data to take profits on positions that were made on hopes that
global growth was slowly picking up. That optimism drove up
Asian shares more than 50 percent at one point from their low
mark in early March.
Ratings agency Standard & Poor's said in a report on Asian
economies on Thursday that it was too early to say the global
economy has bottomed.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> dropped 3.3 percent and looked poised for its
biggest one-day drop in six weeks. But the benchmark was still
up some 19 percent since the start of the year and 45 percent
from its year low struck in March.
On Wednesday, the S&P 500 <.SPX> shed 2.7 percent, and
futures on that U.S. stock index <SPc1> were down slightly in
Asia.
Japan's Nikkei average <> fell 2.6 percent. Hong
Kong's Hang Seng index <> shed 3.2 percent, with HSBC
<0005.HK> and China Mobile <0941.HK> -- the two biggest
heavyweights in the index -- leading the decline.
In another sign that investors were taking profits, open
interest in Hang Seng futures <HSIc1> fell on Wednesday after
reaching its highest level since Oct. 8 -- at the tail end of
last year's slide to five-year lows.
The dip in open interest and fall-off in volume signalled
that market players were taking chips off the table and were
reluctant to chase the market higher.
"Even though money is continuing to come into Hong Kong, it
is not directly flowing into the stock market anymore," said
Linus Yip, strategist with First Shanghai Securities in Hong
Kong.
Investors are also keeping an eye on the results of India's
general election. The ruling Congress-led coalition is slightly
ahead of the opposition Hindu nationalists-led alliance, but
both groups have fallen short of a parliamentary majority,
according to early projections. []
The decline in Mumbai's SENSEX <> was limited
compared with the rest of the region, shedding 1 percent.
DOLLAR LIMPS UP, BONDS JUMP
The dollar limped up from a four-month low hit on
Wednesday, partly on the revival of risk-taking but also
because its break through the 200-day moving average against
the euro sparked wide selling.
Chart technicals for the U.S. currency have turned negative
since the break of the widely tracked 200-day moving average,
which has signalled turning points against the euro in the
past.
The euro slipped 0.2 percent to $1.3570 <EUR=> after having
jumped to $1.3722 the previous day, threatening to push above
the peak reached in March that would likely add fuel to the
rise.
The dollar index, a gauge of its performance against six
major currencies, edged up 0.1 percent to 82.671 <.DXY>.
Against the yen, the dollar was up slightly at 95.70 yen
<JPY=>.
The dollar's slide had reinforced a jump in gold and oil
prices. Gold was down 75 cents an ounce at $924.70 <XAU=>,
while U.S. crude <CLc1> dipped 44 cents to $57.58 a barrel
after having climbed as high as $60.08 this week.
Battered bonds recovered as stocks lost ground.
JGB futures <2JGBv1> gained 0.44 point at 136.94 after
having fallen to their lowest since late October on Wednesday.
The benchmark 10-year JGB yield <JP10YTN=JBTC> was down 2 basis
points to 1.430 percent.
South Korean government bonds rebounded sharply in early
trade after the country's finance minister said he was not
confident about the improvement in the job market.
Korean government bond futures <KTBc1> rose 26 ticks,
bouncing from a one-month low hit this week.
(Additional reporting by Jungyoun Park in Seoul and
Parvathy Ullatil in Hong Kong; Editing by Kim Coghill)
