By Louise Heavens
SINGAPORE, Feb 5 (Reuters) - Asian share markets fell on
Tuesday with financials such as Japan's MUFG <8306.T> among the
weakest after U.S. credit card firms and banks were downgraded,
stoking fears their troubles could spread to the global sector.
Japanese government bonds were back in favour, having been
left in the cold on Monday after news Microsoft Corp's <MSFT.O>
$45 billion bid for Yahoo <YHOO.O> and China's purchase of a
stake in takeover target Rio Tinto <RIO.AX> boosted investor
optimism over share valuations.
The dollar <EUR=> held steady against the euro at 1.4812,
while the Australian dollar <AUD=D4> hovered near a three-month
high versus the U.S. currency before a widely expected
Australian interest rate increase later in the day.
Share markets in Tokyo, Seoul, Hong Kong and Sydney fell
between 0.4-1.5 percent. MSCI's measure of Asian stocks
excluding Japan <.MIAPJ0000PUS> was down 0.8 percent by 0220
GMT.
Major indexes rallied on Monday, buoyed by M&A deals, while
Shanghai's composite scored its biggest daily rise since June
2005 after regulators approved two new stock funds.
"Markets are taking a breather after a recent strong
rebound, but it looks like investment seems to have stabilised
significantly," said Lee Sun-yeop, an analyst at Goodmorning
Shinhan Securities.
"Investors are betting that there might be no big rupture
in global markets in the rest of the week because there are few
scheduled major U.S. economic data during the period"
On Wall Street on Monday, the Dow Jones industrial average
<> and Nasdaq Composite index <> shed roughly 1
percent each.
Downgrades to financial institutions, such as American
Express <AXP.N>, combined with a report showing
slower-than-expected factory orders, hurt other economically
sensitive sectors such as home builders and retailers.
Certain stocks still basked in the afterglow of recent mega
deals, which signalled that there was still plenty of value to
be wrung out of some sectors.
Shares in Yahoo Japan Corp <4689.T> jumped for a second day
following Microsoft Corp's $44.6 billion bid for Yahoo Inc.
Tokyo's Nikkei <> was down 1.2 percent by the
midsession, dragged lower by a near-14 percent drop in camera
maker Olympus Corp <7733.T> after it issued a dire outlook.
Mitsubishi UFJ Financial Group and other Japanese bank
shares declined after brokerages downgraded U.S. banks and
credit card companies, fuelling recession fears.
Seoul's KOSPI <> dipped 0.4 percent, Hong Kong's Hang
Seng <> fell 1.5 percent, and Singapore's Straits Times
<.FTSTI> slipped 0.8 percent.
Activity in Asia has been subdued so far this week, partly
due to Lunar New Year holidays across much of the region later
in the week.
AUSSIE DOLLAR
The Australian dollar dipped to $0.9064 <AUD=D4> from near
$0.9080 earlier as investors waited on the Reserve Bank of
Australia's interest rate decision later in the session.
The RBA's review marks the start of a string of central
bank meetings and is expected to hike interest rates to 7
percent in a bid to rein in inflation, in sharp contrast with
other major central banks that are cutting rates.
The dollar was little changed from late U.S. trade at
106.77 yen <JPY=>, holding off a three-year low of 104.95 yen
struck in January.
In the bond market, March 10-year JGB futures rose 0.09 of
a point to 137.450 <2JGBv1>, while the benchmark 10-year JGB
yield dipped 0.5 basis point to 1.460 percent <JP10YTN=JBTC>.
Oil dipped, but held just below $90 a barrel, following
news that some ships had managed to pass through into the
Houston area in the United States after a dense sea fog, which
halted crude imports, lifted briefly.
U.S. light crude for March delivery <CLc1> fell 22 cents to
$89.80 a barrel, partially erasing Monday's $1 gain.
Platinum <XPT=> spiked to another record high above $1,800
an ounce, as supply concernspersisted in main producer South
Africa, also lifting the priceof palladium. Spot gold <XAU=>
rose to $906.00/907.50 an ounce.
(Editing by Jacqueline Wog)
