* Risk aversion help US dollar, hurts stocks and
commodities
* Lehman's losses keep focus on risky financial sector
* MSCI Asia-ex Japan index at lowest since October 2006
By Kevin Plumberg
HONG KONG, Sept 11 (Reuters) - Asian shares fell broadly on
Thursday, with shares outside Japan at the lowest since October
2006, hit by persistent instability in the financial sector,
while the U.S. dollar struck a one-year high against the euro.
Heightened volatility and the potential for sharp economic
weakness outside the United States convinced U.S. investors to
cut their holdings of riskier assets such as emerging market
stocks and commodities and for now keep their money at home.
European stock index futures fell, with Eurostoxx 50
<STXEc1>, Germany's DAX <FDXc1> and France's CAC 40 <FCEc1> all
down about 0.3 percent as investors worried about the fate of
some troubled financial institutions.
Bank stocks including Mitsubishi UFJ Financial Group
<8306.T> fell 5 percent after Lehman Brothers <LEH.N> posted a
record quarterly loss of $3.9 billion. The dismal results from
Lehman, which is trying to shed assets to stay alive, sent a
message to investors that the year-long global credit crisis
will likely claim more victims before ending. []
Tokyo's Nikkei share average <> closed 2 percent lower
at a six-month low and the MSCI Asia Pacific ex-Japan index
<.MIAPJ0000PUS> dropped 2.8 percent to its lowest since October
2006.
"We believe inflation concerns are now waning and the new
worries are around the broadening of the economic slowdown to
Europe, Japan and emerging markets. In our view, this risk is
very real," said Adrian Mowat, JPMorgan's emerging markets and
Asia-Pacific equity strategist, said in a note.
Bank shares took a beating with China Construction Bank
<0939.HK>, the country's second-largest bank, down 4.2 percent
and Industrial and Commercial Bank of China <1398.HK> lost 3.8
percent.
Hong Kong's Hang Seng index <> declined 2.7 percent to
a one-year low. Shares of China Mobile <0941.HK> fell 4.4
percent on a new policy in some of the company's markets that
could make the world's largest cellular operator less
competitive.
The regional weakness put the MSCI all-country world index
<.MIWD00000PUS> on course for the ninth down day of the last
10. The index hit a two-year low on Wednesday.
VOLATILE HAPPENINGS
Indications of increased volatility in stock and bond
markets as well as economic deterioration in just about every
part of the world has led investors to cut back on overseas
risk in their portfolios, supporting the dollar.
"The market's direction points toward dollar buying," said
Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ
Trust Bank in Tokyo.
"What we are witnessing now is position adjustments that
are part of a bigger picture, one in which investors are
pulling back money from risk assets," Inoue said.
The euro briefly fell below $1.3950 <EUR=> to the lowest
since September 2007, with investors focused for now on rapidly
slowing economic growth outside of the United States.
However, the dollar fell against the yen, down 0.4 percent
to 107.40 yen <JPY=>. Against the yen, the euro tumbled 0.4
percent to 150.04 yen <EURJPY=>.
The dollar for the most part has been rallying since crude
oil prices peaked at $147.27 a barrel in mid July and then fell
sharply.
The U.S. currency received an added boost by the U.S.
government's takeover of Fannie Mae <FNM.N> and Freddie Mac
<FRE.N> at the weekend, which helped calm some fears of further
widespread bond market losses.
Still, investors continue to shed commodity-related trades
in earnest as risk taking takes a back seat to the need for
stability amid the slowing global economy.
October U.S. light crude contract <CLc1> edged up 70 cents
to $103.28 <CLc1> after hitting a five-month low on Wednesday
as the dollar rallied. Crude would need to trade above $109 a
barrel to break a steep downward trend in prices that has held
since July 14. []
The reduction in risk taking in just about every asset
class has been swift and definite and has pushed up the cost of
insurance against credit defaults.
"We have entered a new phase of the credit cycle marked by
accelerated deleveraging. Herd recycling of risk through
commodities, currencies, rates, and equities is sponsoring
hyper volatility," said Brett Williams, credit analyst with BNP
Paribas in Hong Kong.
(Additional reporting by Shinichi Saoshiro in TOKYO; Editing
by Anshuman Daga)
