* Asia stocks slip after reaching 1-yr high, down 0.5 pct
* Aussie dips after retail sales data stirs rate caution
* Gold gains, underpins Aussie but keeps USD pinned near
lows
* Euro/dlr options triggered, spark implied vol jump
By Eric Burroughs
HONG KONG, Sept 9 (Reuters) - Asian stocks drifted lower
after hitting a one-year high earlier on Wednesday and the
dollar was stuck near a one-year low as investors, hopeful of
an economic recovery, held back from moving more money into
risky assets.
European shares were set to stumble at the start, with
futures on the Euro Stoxx 50 <STXEc1> slipping 0.3 percent in
early trade.
The dollar, a haven for investors in difficult times, has
been battered this week as market participants have favoured
high-yielding investments and emerging markets.
Gold's surge above $1,000 has powered gains in other
commodities and raised worries that money is being shifted out
of the dollar.
The Australian dollar slipped after retail sales
surprisingly dropped in July and housing lending cooled. That
raised questions about how soon the central bank would start
raising interest rates. []
"There has been sufficient strength in recent data and in
comment from policymakers for a shift to a tightening bias at
the October meeting," said Patrick Bennett, Asia FX and rates
strategist at Societe Generale, referring to the Reserve Bank
of Australia.
"What is appropriately being called into question is the
timing and extent of the action that follows."
Asia is at the forefront of unwinding ultra-loose monetary
policies put in place to stem the shock from the financial
crisis. With the growth revival in some countries proving
unexpectedly strong, some policymakers worry that cheap money
is fuelling asset bubbles.
Australia and South Korea are among those seen closest to
pulling the trigger on higher rates, with investors focusing on
a Bank of Korea meeting on Thursday for clues on how quickly a
rate hike could come. The bank is expected to keep its base
rate unchanged at 2 percent.
South Korean authorities are among the most concerned about
a property price bubble. Reports on Wednesday showed household
mortgage lending slowed in August after tighter controls, while
money supply growth slowed in July.
Portfolio managers have been undaunted by the prospect of
normalising monetary policy, with the process expected to be
drawn out as officials remain cautious about the recovery's
staying power.
South Korean Finance Minister Yoon Jeung-hyun said that it
plans to take a gradual approach to unwinding emergency
policies and sees any exit strategy at premature for now.
[]
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> dipped 0.5 percent and gave up early gains that
pushed the benchmark to a one-year peak.
So far this year the MSCI APXJ is up 53 percent, outpacing
the nearly 23 percent rise in world shares <.MIWD00000PUS> and
10.5 percent increase in the MSCI index of Japanese shares
<.MSCIJP>.
Losses were limited across Asia, with Japan's Nikkei
average <> dipping 0.8 percent and South Korea's KOSPI
<> shedding 0.7 percent following the 0.9 percent rise in
the U.S. S&P 500 <.SPX> on Tuesday.
Consumer discretionary, telecom and technology shares were
the biggest losers by sector, suggesting some profit-taking in
the biggest gainers this year.
LG Electronics <066570.KS>, the world's No. 3 handset
maker, was the biggest drag on the KOSPI, shedding 8 percent
after Nomura cut its price target and revised down its profit
estimate for the fourth quarter.
Some analysts believe that investors who were slow to seize
on the rally in stocks and commodities this year may buy on any
pull-backs in coming months, keeping risky assets underpinned.
"I suspect the incentives of portfolio managers to bet on a
global recovery should overwhelm those betting on a relapse in
growth," said Stephen Jen, managing director of macroeconomics
and currencies at BlueGold Capital Management, a hedge fund in
London.
In currencies, the dollar was little changed and held near
a one-year low against a basket of currencies at 77.268 <.DXY>.
The euro was flat at $1.4490 <EUR=> after having jumping as
high as $1.4535 the previous day.
Euro/dollar implied volatility <EURVOL> also jumped as the
rise triggered barrier options and hedging from option trading
desks.
Traders said more barrier options were seen at $1.4550 and
higher, potentially blocking further gains, adding that a steep
implied vol curve suggested that players were not betting on a
decisive run higher.
The dollar's slide, which analysts partly blamed on model
funds dumping the currency due to the break higher in gold
prices, has taken it through chart levels that suggest a deeper
drop may be in store.
The dollar index has fallen through the 61.8 percent
retracement of its rally from a record low hit in March 2008 to
its highs reached in March this year, putting it on track to
revisit the record low.
For a graphic: http://r.reuters.com/caw55d
Gold rose $6.95 an ounce to $1002.15 <XAU=> and hovered
just below the high of $1007.45 hit on Tuesday, putting it on
course to target the record high of $1030 hit in March 2008
when the dollar hit its all-time lows.
Traders said news that Barrick Gold will sell $3 billion of
stock to eliminate all of its fixed-price gold hedges was
positive news for bullion. []
The rise in gold helped limit losses in the Australian
dollar, which has the strongest correlation of major currencies
with gold due to Australia's hefty metal exports. The Aussie
was down 0.1 percent at $0.8610 <AUD=D4> but off a session low
of $0.8584.
Safe-haven government bonds edged up on the dip in stocks.
Korean government bond futures were up 11 ticks at 109.98
<KTBc1> after hitting a five-week high of 110 in early trade,
getting a boost in part from expectations that South Korean
bonds will soon be added to Citigroup's World Government Bond
index.
(Additional reporting by Jungyoun Park in Seoul; Charlotte
Cooper and Satomi Noguchi in Tokyo; Editing by Jan Dahinten)
