* Asia stocks fall 1.6 pct to 2-wk low but prove resilient
* Nikkei hits 6-wk low, machinery orders at record low
value
* Yen jumps as higher-yielding currencies extend slide
* Ten-yr JGB yield hits 3-1/2-mth low, Treasury yields down
By Eric Burroughs
HONG KONG, July 8 (Reuters) - Japan's Nikkei share average
and oil prices hit six-week lows on Wednesday as investors
pulled funds out of bets on the global economy's recovery and
favoured safe havens, such as the U.S. dollar and government
bonds.
European stock futures <STXEc1> pointed to a drop of about
half a percent in early trade.
Comments that a second U.S. stimulus package may be
necessary coupled with heavy U.S. job losses have taken the
wind out of a rally in global stocks and commodities, tempering
some of the optimism about how quickly growth will return.
"Talk of more stimulus spending is making investors
nervous," said Kim Seong-joo, an analyst at Daewoo Securities
in Seoul.
Market players were also taking profits and striking a
cautious stance before a slew of quarterly corporate earnings
announcements around the world, which will be scanned for
comments on the demand outlook.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> dropped 1.6 percent to hit a two-week low, with
energy and financial shares falling the most. The MSCI index of
world shares <.MIWD00000PUS> shed 0.6 percent to a seven-week
low.
On Tuesday the U.S. S&P 500 <.SPX> fell 2 percent to hit a
seven-week low.
But Asian stock indexes proved resilient, with South
Korea's KOSPI holding near a nine-month intraday peak and the
Shanghai Composite near a 13-month peak, as solid Chinese
growth has helped limit the fallout in some parts of the
region.
Highlighting the diverging performance between emerging
Asian stock markets and global developed markets, the MSCI
benchmark for Asia excluding Japan is still up 27 percent so
far this year compared with a 3.4 precent rise in world stocks.
Japan's Nikkei <> was the hardest hit, falling 2.4
percent and down for a sixth straight trading day.
Shares of machinery makers such as Komatsu <6301.T> dropped
after data showed private-sector orders posted a surprising
fall in May to the lowest level since comparable records began
in 1987. []
But another report showed confidence among Japan's service
sector workers jumped to a two-year high in June, boosted by
subsidies on energy-efficient products and one-time government
payments to households as part of efforts to support the
economy. []
Blackrock Japan, a unit of the world's biggest money
manager, said on Wednesday that a further economic recovery
could usher in more portfolio flows to Japanese equities as
overseas client interest has picked up since March.
"Foreign institutional investors were underweighting
Japanese equities. The recovery will bring a very big inflow,"
Hiroyuki Arita, the firm's president and representative
director, said at the Reuters Japan Investment Summit in Tokyo.
[]
Foreign investors have been slower to return to Japan after
a nine-month streak of dumping shares, preferring high-growth
markets in Asia instead. Data on Wednesday showed foreign
investors bought a net 261 billion yen ($2.8 billion) of
Japanese shares in June, the third straight month of purchases.
The yen pushed higher as investors reversed positions in
higher-yielding currencies, which tend to benefit from rising
stocks and commodities. The low-yielding yen is often used as a
cheap source of funds to buy higher-yielding currencies in
carry trades.
The dollar slid 0.7 percent to 94.10 yen <JPY=> and touched
a five-week low. The euro shed 1 percent to 130.50 yen
<EURJPY=R> and struck a six-week low.
The dollar index <.DXY>, a gauge of its performance against
six major currencies, was steady and buoyed by investors
shedding emerging market and other currencies for the U.S.
unit.
Government bonds extended their rally.
The benchmark 10-year Japanese yield <JP10YTN=JBTC> fell 2
basis points to 1.285 percent, a 3-1/2-month low and down 27.5
basis points in the past month as Japanese banks have shovelled
funds into safe-haven debt.
U.S. Treasuries also climbed in Asia, with the 10-year
yield <US10YT=RR> down 3 basis points at 3.433 percent having
touched a six-week low of 3.428 percent. That yield has dropped
nearly 60 basis points in the past moth, flattening the yield
curve.
U.S. crude prices were down 86 cents a barrel at $62.07
<CLc1> and have shed more than $11 in a little more than a
week. Gold was little changed at $922.70 an ounce <XAU=>.
(Additional reporting by Rhee So-eui in Seoul; Chikafumi
Hodo and Kevin Plumberg in Tokyo; Editing by Neil Fullick)
