* Weak U.S. consumer sentiment sparks selloff of risky
assets
* Asia stocks fall 1 pct; euro pauses in short-covering
rally
* U.S. dollar firm despite concerns about U.S. growth
* Bernanke testimony, EU stress test results later in week
By Koh Gui Qing
SYDNEY, July 19 (Reuters) - Asian stocks fell on Monday as
a sharp drop in U.S. consumer sentiment added to worries that
its economic recovery is losing momentum, with the cautious
tone also pulling the euro from two-month highs.
The MSCI index for Asian stocks outside Japan
<.MIAPJ0000PUS> dropped 1 percent, its worse daily performance
this month, as investors sold riskier assets. Australian stocks
<> fared the worst in the region, shedding 1.6 percent.
The Japanese market was shut on Monday for a holiday.
"The key issue driving the market at the moment is slower
global growth," said George Clapham, head of equities at Arnhem
Investment Management in Australia.
Investors who believed the world economy is on shaky ground
got more ammunition for their arguments on Friday after U.S.
data showed consumer prices fell for the third straight month
in June while consumer sentiment dropped to a near one-year
low. []
Major U.S. stock indexes slumped as much as 3.1 percent,
with the gloom spilling over into Asia on Monday. []
Sub-indices for the MSCI Asia ex-Japan share index showed
materials stocks led losses in the region as the weak U.S. data
weighed on oil and metals prices. The materials index
<.MIAPJMT00PUS> was down 1.2 percent.
All said, there were a couple of bright spots among Asian
markets, helped mainly by corporate takeover activity.
Australia's Healthscope <HSP.AX> leapt 11 percent to near
three-year highs after the firm recommended a $1.7 billion
takeover bid from two private equity firms. []
Singapore healthcare firm Parkway <PARM.SI>, the target of
a bidding war, was up 0.3 percent, aided by talk that it may
get a sweetened offer from one of its two corporate suitors.
Yet, there was no missing the lacklustre tone in the broader
market. Oil prices <CLc1> dipped 0.3 percent to $75.77, while
safe-haven gold <XAU=> eased to $1,192.80 an ounce after
falling to its lowest in more than a week in the previous
session.
EURO AWAITS BANK STRESS TESTS
The euro, which had staged a smart comeback in recent weeks
helped largely by a short squeeze, also lost steam on Monday as
cautious investors took profits on its recent gains.
The euro traded at $1.2893 <EUR=>, down from Friday's
$1.2933. But some traders warned it may be too early to believe
the euro is on a strong rebound having survived the worse of
Europe's debt crisis.
Markets are anxiously awaiting the results of stress tests
on European banks due out on Friday. []
Monday's drop in the euro benefitted the U.S. dollar,
despite concerns about the health of the U.S. economy. The U.S.
dollar index <DXY> against a basket of other major currencies
was up 0.2 percent at 82.643.
With the market anxious to know whether the world's biggest
economy is stalling, semiannual testimony by U.S. central bank
chief Ben Bernanke on Wednesday will also be closely watched by
investors.
(Editing by Kim Coghill)
