(Adds markets, updates prices)
By Louise Heavens
SINGAPORE, Feb 5 (Reuters) - Asian share markets fell on
Tuesday with financials such as Japan's MUFG <8306.T> among the
weaker performers after U.S. credit card firms and banks were
downgraded, stoking fears their troubles could spread to the
global sector.
European markets were expected to follow Asia's lead, with
financial bookmakers in London forecasting Britain's FTSE 100
<>, Germany's Dax <> and France's CAC-40 <> to
open between 0.4-0.9 percent lower.
The dollar held steady against the euro <EUR=> at 1.4812,
while the Australian dollar <AUD=D4> was supported by a hike in
interest rates to an 11-year high. []
Share markets in Tokyo, Hong Kong and Sydney fell between
0.8-1.5 percent. MSCI's measure of Asian stocks excluding Japan
<.MIAPJ0000PUS> was down 0.7 percent by 0601 GMT.
Major indexes rallied on Monday, buoyed by merger and
acquisition news, while Shanghai's composite scored its biggest
daily rise since June 2005 after regulators approved two new
stock funds.
Japan's Nikkei index <> closed down 0.8 percent, with
Honda Motor Co Ltd <7267.T> under pressure after downgrades of
U.S. credit card firms fuelled recession fears. Camera maker
Olympus Corp <7733.T> fell almost 14 percent after it issued a
weaker outlook.
"Ordinary investors can't wipe off the image that if the
U.S. economy slows, Japanese exporters will be hit," said Fujio
Ando, a senior managing director at Chibagin Asset Management.
Downgrades to financial institutions such as American
Express <AXP.N>, combined with a report showing
slower-than-expected U.S. factory orders, hurt other
economically sensitive sectors such as home builders and
retailers on Wall Street on Monday.
Hong Kong's Hang Seng <> fell 1.5 percent, while
Singapore's Straits Times <.FTSTI> slid 1.8 percent. But
Seoul's KOSPI index <> rose 0.4 percent, with investors
picking up some beaten down stocks after the index plunged 14.4
percent in January, the worst monthly performance since October
2000.
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.
As stock markets across Asia handed back gains from
Monday's rally, Japanese government bonds held firm, although
shedding some of their earlier gains.
JGBs slipped on Monday after 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.
AUSSIE RATE HIKE
The Australian dollar traded at $0.9071 against the dollar,
hovering near three-month highs, after the Reserve Bank of
Australia lifted rates by a quarter-point to 7 percent and said
a "significant" slowing of growth was needed to keep inflation
contained, which traders took as a signal that more rate rises
could be in store.
The RBA's move, which had been expected by market watchers,
was in sharp contrast with other major central banks that are
cutting rates.
The dollar was steady at 106.85 yen <JPY=>, holding off a
three-year low of 104.95 yen struck in January.
Oil dipped below $90 a barrel following news that some
ships had managed to pass through into the Houston area in the
United States after dense sea fog, which had halted crude
imports, lifted briefly. The area is a key refining centre.
U.S. light crude for March delivery <CLc1> fell 25 cents to
$89.77 a barrel, partially erasing Monday's $1 gain.
Platinum <XPT=> spiked to another record high above $1,800
an ounce before easing back to trade at $1,780 as supply
concerns persisted in main producer South Africa, also lifting
the price of palladium. Spot gold <XAU=> traded at
$902.50/903.50 an ounce.
(Editing by Kim Coghill)
