* Tokyo’s Topix hits 28-year low
* MSCI Asia ex-Japan falls to 2012 lows, Nikkei slumps over
2 pct
* Euro and Aussie off lows, yen off highs
* JGBs soar, 10-year yield lowest since July 2003 on safety
bid
By Chikako Mogi
TOKYO, June 4 (Reuters) – Asian shares tumbled on Monday,
pushing the broader Tokyo market to a 28-year low, as investors
extended a rout of global stocks and worried about a nightmare
scenario of euro-zone breakup, U.S. economic relapse and a sharp
slowdown in China.
Tokyo’s broader Topix index lost 2.1 percent to
693.35, a level not seen since late 1983, as Asian markets
plumbed new lows for 2012. Japan’s Nikkei average fell 2
percent after last week marking its ninth straight week of
losses, the longest such losing streak run in 20 years.
Investors continued to head for the relative safety of bonds
after weak U.S. jobs data on Friday sparked a global stampede
out of equities and hit the euro and some risky currencies hard.
The MSCI’s broadest index of Asia-Pacific shares outside
Japan plunged 2.2 percent to their lowest since
December. And U.S. stock futures pointed to yet more selling
when investors wake up in North America on Monday, with S&P; 500
futures down 0.8 percent in Asian trade.
The euro and the Australian dollar, which is closely linked
to risk appetite, staged only meek recoveries from their
battering on Friday when the Australian currency hit eight-month
lows. The yen, perceived as a safer currency in times of crisis,
retreated from its highs against the dollar.
Overall, though, investors hedged against global financial
and economic crisis, heading for havens such as the benchmark
10-year Japanese government bond whose yield fell
below 0.80 percent to its lowest since July 2003. Ten-year JGB
futures prices jumped to a 19-month high.
U.S. and German government bond yields had both hit record
lows on Friday.
Analysts said the flight to bonds was expected to continue
until clarity emerged on issues such as the outcome of Greek
elections due on June 17 and the recapitalisation of European
banks, now in the shadow of a Spanish banking crisis.
“It’s not an issue of risk-on or risk-off anymore, it’s
nervousness all over until a clear direction emerges on a
long-term trend,” said Hisamitsu Hara, chief FX manager at Bank
of Tokyo-Mitsubishi UFJ.
“Currencies are locked in ranges with high volatility, with
both the euro and the dollar facing limited upside due to their
problems, while the yen’s upside is also capped by wariness
about intervention,” he said.
U.S. job growth braked sharply for a third straight month in
May and the jobless rate rose for the first time in nearly a
year, with 69,000 jobs added to payrolls last month, the least
since May last year. As well, 49,000 fewer jobs were created in
the previous two months than had been thought.
“We may even see more talk of the need for additional
quantitative easing,” Standard Chartered Bank said in a research
note, adding that the data had given ammunition to doves ahead
of the U.S. Federal Reserve’s policy meeting on June 19-20.
The median of forecasts from 15 primary dealers – those
institutions that do business directly with the Fed – showed a
50 percent chance the central bank would eventually launch
another round of quantitative easing, up from 33 percent on May
4, according to Reuters polling.
The weak U.S. data followed poor Chinese manufacturing data
and dismal European reports on factory activity. Markets had
already been on edge over the deepening euro-zone crisis.
Spot gold was down 0.5 percent at $1,616.99 an ounce
on Monday after posting its biggest one-day rally in more than
three years on Friday.
The yen stood at 78.18 yen against the U.S. dollar on
Monday, off a 3-1/2 month high of 77.65 yen hit on Friday. It
stood at 96.99 against the euro, after climbing to its highest
since December 2000 of around 95.59 yen on Friday.
The euro was at $1.2410 on Monday, recovering from
Friday’s low of $1.2288.
“The evolving global slowdown amidst global sovereign
financing dilemmas has pushed the yen back into ‘super yen’
territory, signalling extreme pressures,” said Richard Hastings,
macro and consumer strategist at Global Hunter Securities,
adding that he saw little relief in the euro/yen pair.
“If the European situation worsens, then the global interest
rate and policy solutions would require coordinated actions by
the Bank of Japan and the Federal Reserve to assure access to
U.S. dollar money markets, otherwise risk a contraction in
global trade,” he said.
Analysts are closely watching several monetary policy
meetings due this week, including the European Central Bank on
Wednesday and Bank of England on Thursday, for clues on their
responses to vulnerable global growth.
U.S. crude futures fell 1 percent to $82.35 a barrel
on Monday, after hitting its lowest level in almost eight months
on Friday. Brent eased 0.6 percent to $97.83.
