* Shares, commodity prices fall on Obama's plan
* Yen reaches nine-month high against euro; 5-wk high vs
dlr
* Tokyo ends at three-week closing low
* Investors flock to safe-haven government debt, JGBs up
By Raju Gopalakrishnan
SINGAPORE, Jan 22 (Reuters) - Asian stock markets skidded
on Friday and commodity prices fell across the board after U.S.
President Barack Obama proposed new restrictions on banks that
spurred selling of risky assets.
European shares <> were also expected to fall on the
proposals, which would prevent banks or financial institutions
that own banks from investing in, owning or sponsoring a hedge
fund or private equity fund.
The restrictions could limit leverage in the financial
system and the role of risk-taking by hedge funds, but analysts
said passage of the proposals in the U.S. congress was not
assured and it was too early to read too much into the market
reaction.
"There is little doubt that the president's actions are
unwelcome by the financial markets, or that the president
himself is clearly annoyed at the current largesse of this
year's bonus round," said Sean Keane, an analyst at Triple T
Consulting in Wellington and former head of money market
trading at Credit Suisse in Singapore.
"Whether or not this 'war' will see a real shot fired
remains to be seen however, with the proposals needing
Congressional approval before they can become law."
Japanese stocks <> fell 2.56 percent to a three-week
closing low as the yen surged against the dollar and the euro
and as falling metal and oil prices weighed on shares of
resource-related firms.
Other Asian markets were also badly hit. South Korea's
benchmark <> fell 2.19 percent while Hong Kong <> slid
as much as 2.5 percent during the day. Banks have a heavy
weighting in many global benchmark share indexes.
The MSCI Asia-Pacific index excluding Japan <.MIAPJ0000PUS>
was down 2.1 percent and looked set for a loss of 4.8 percent
this week.
Commodity prices fell because the proposed U.S. regulations
were seen as diminishing capital flows from banks, which have
provided liquidity for investors.
Oil <CLc1> and copper <MCU3> languished near four-week
lows, gold <=XAU> flirted with a three-week low and platinum
lost ground, while agricultural commodities sagged.
U.S. stocks fell as much as 2 percent overnight, the worst
one-day percentage fall since October, as financial shares in
particular were hit by Obama's plan. []
The rules would also bar institutions from proprietary
trading operations, unrelated to serving customers, for their
own profit. These bets have been enormously profitable for the
banks but can hold huge risks for the financial system if they
go wrong. []
"Obama is trying to restrict leverage... (but) it doesn't
make a lot of sense. The basic premise in banking is to
transfer risk and a riskless bank doesn't make sense -- or
money," said Steve White, director at Sydney-based treasury
advisory firm Noah's Rule.
Global markets had already recoiled in recent weeks on
fears that Chinese demand would slow as Beijing taps the brakes
on its roaring growth to stave off inflation and keep the
economy from overheating.
Mixed data from the United States, meanwhile, have fuelled
concerns that the pace of its economic recovery may be slowing,
and that corporate profits may not be as strong as first
expected this year. []
Other factors were at play in Tokyo as well.
Toyota Motor Corp <7203.T> lost 3.2 percent after it said
on Thursday it would recall 2.3 million vehicles in the United
States to fix potentially faulty accelerator pedals, broadening
a recall that already ranked as its largest ever.
Shares of Shin-Etsu Chemical <4063.T> lost 6 percent after
the world's biggest maker of silicon wafers used to make
semiconductors reported a 53 percent fall in quarterly
operating profit, hurt by weak prices and a strong yen, and it
said it expected its annual profit to halve from a year
earlier.
Earlier, the euro, which has been under pressure from
Greece's debt troubles, hit a nine-month low against the yen at
126.55 yen <EURJPY=>, taking the dollar down with it.
The dollar lost ground and fell to its lowest in five weeks
against the yen <JPY=>, dropping as far as 89.85 yen before
steadying around 90.00. Support for the dollar is seen around
88.80/90 yen. []
The dollar index <.DXY> <=USD> was down about 0.13 percent
around 78.217, just below its 200-day moving average at 78.48,
which was seen as a zone of short-term resistance.
Equity and commodity sell-offs drove investors to
safe-haven government bonds. Benchmark 10-year U.S. Treasuries
<US10YT=RR> rose 14/32 of a point overnight before pulling
back.
Lead March 10-year Japanese government debt futures rose
0.25 point to 139.23 <2JGBv1> after hitting 139.46, their
highest since the start of the month. The benchmark 10-year
government bond yield fell 2 basis points to 1.320 percent
<JP10YTN=JBTC>.
(Editing by Tomasz Janowski)
