* MSCI Asia ex-Japan falls, Nikkei opens down 1.5 pct
* Gold retreats, U.S. crude eases
By Chikako Mogi
TOKYO, April 11 (Reuters) – Asian shares fell for a third
straight day on Wednesday as uncertainty over global growth
prospects, and resurfacing worries about debt restructuring in
the euro zone, prompted investors to continue trimming their
risk exposures.
After a sharp drop in global equities overnight, Japan’s
Nikkei average opened down 1.5 percent, and MSCI’s
broadest index of Asia Pacific shares outside Japan
was down 0.2 percent.
“For Q2, our strategy remains defensive,” Standard Chartered
Bank said in a research note. “US data is deteriorating, Europe
is in recession and China is still slowing.”
The benchmark Standard & Poor’s 500 Index slid 1.71
percent on Tuesday, its worst day in four months, the same day
European shares hit a 10-week low on the first trading day after
the four-day Easter weekend.
The sell-off was triggered by Friday’s data which showed a
sharp slowdown in U.S. jobs creation last month, along with
Tuesday’s data which suggested softening Chinese demand.
Worries about tepid global demand growth hit industrial
commodities such as oil and copper but benefited gold and U.S.
and German government debt on investors’ safety bids on Tuesday.
Asian credit markets took a hit from growing risk aversion,
with the spread on the iTraxx Asia ex-Japan investment-grade
index widening by 4 basis points on Wednesday.
RISING STRESS SIGNS
The euro inched down 0.1 percent to $1.3073 while the
dollar fell to a five-week low of 80.60 yen.
Benchmark 10-year U.S. Treasury yields fell
below 2 percent for the first time in over four weeks on Tuesday
while resurfacing concerns about Europe’s debt problems drove
Spanish 10-year yields up to nearly 6 percent.
Spanish bonds have been weighed by last week’s weak debt sale.
Italian bond yields were also dragged higher ahead of a 5
billion euro bond auction on Thursday.
Rising premiums on the peripherals pushed German government
bond yields lower, with the two-year yield at 0.098
percent undershooting the two-year Japanese debt
yielding around 0.1 percent. German bond yields are lower than
Japanese yields for the first time since January 1988, according
to a Merrill Lynch report.
In another sign of rising stress in markets, the VIX index
rose to a five-week high on Tuesday to end at 20.39,
having jumped about 31 percent so far in April. The index, a key
gauge of how investors perceive risk, measures expected
volatility in the Standard & Poor’s 500 index over the
next 30 days, and its increase reflects growing risk aversion.
Greece will call a snap election for May 6 on Wednesday,
government officials said, launching a campaign that may produce
no clear results and risk implementation of the bailout plan
that saved Athens from bankruptcy.
Oil suffered its biggest one-day percentage loss of the year
on Tuesday, hitting a seven-week low on concerns about a
potential slowdown in the economy of No. 2 crude consumer China.
Brent crude fell $2.79 to settle at $119.88 a
barrel, the weakest close since Feb. 17. The 2.27 percent slide
was the biggest one-day percentage loss since Dec. 14. U.S.
crude eased below $101 on Wednesday, after settling at
$101.02 the day before, the lowest close since Feb. 14.
Copper fell to a three-month low on Tuesday, hit by
softening demand prospects linked to a cooling Chinese economy
and slowing jobs growth in the United States, the world’s two
largest copper consumers.
Gold was down 0.2 percent at $1,657 an ounce on
Wednesday, after rising 1 percent the day before for a fourth
straight day of gains, its longest streak in two months.
