* MSCI Asia ex-Japan down 0.2 pct, Nikkei ends down 0.9 pct
* Euro inches up, off 2-month low vs dollar
* Gold firms, set for biggest weekly gain since end-January
* JGB 10-year yield ticks down again to 3-month low
* European shares likely narrowly mixed
By Chikako Mogi
TOKYO, Nov 9 (Reuters) – Asian shares extended losses on
Friday as markets fretted over the U.S. fiscal cliff and the
risk of it tipping the world’s largest economy into recession,
as well as ongoing doubts about a workable bailout for Greece.
After a two-day selloff, a 0.4 percent rise in U.S. stock
futures pointed to a firm Wall Street open. European
shares were seen n a rrowly mixed, with financial spreadbetters
expecting London’s FTSE 100, Paris’s CAC-40 and
Frankfurt’s DAX to open somwhere between a 0.1 percent
fall and a 0.1 percent rise.
Thursday’s losses in global stocks weighed on MSCI’s
broadest index of Asia-Pacific shares outside Japan
, which eased 0.2 percent on top of the previous
day’s 1.3 percent slide, its biggest one-day percentage drop in
two months. The index was set for a 0.4 percent weekly fall.
Washington must resolve the “fiscal cliff” by finding a
compromise to cut the U.S. deficit before nearly $600 billion
worth of spending cuts and tax increases kick in in early 2013.
Market are also eyeing the debt ceiling, which needs to be
raised to avoid a government shutdown.
Analysts say the fiscal cliff could derail the U.S. economy,
which had recently defied a general trend in other parts of the
world by showing signs of a modest recovery, and a U.S.
recession could drag the global economy down further.
“The focus has turned back to the economy after the U.S.
election, with concerns over euro zone risk resurfacing while
the fiscal cliff worries weigh on the local index,” said Kim
Soon-young, an analyst at IBK Securities.
Chinese data showed industrial output and retail sales for
October slightly exceeded expectations, while annual October
consumer inflation eased to its slowest pace in nearly three
years, giving policymakers scope to further looser monetary
policy if needed. The data, coming against the general bearish
sentiment, helped prevent Asian shares from widening losses.
Annual growth in fixed-asset investment also overshot market
expectations to raise hopes for a modest economic recovery in
the fourth quarter.
“But given the uncertainties in the outside world, we expect
the recovery momentum to be limited and the full-year industrial
output is likely to be around 10 percent for this year,” said
Iang Chao, analyst at Guotai Junan Securities in Shanghai.
Australian shares fell 0.5 percent and South Korean
shares ended down 0.5 percent. Japan’s Nikkei stock
average closed 0.9 percent lower.
But the Philippines stock market was slightly firmer,
as a lack of confidence in the U.S. and Europe may turn these
markets more appealing for asset diversification.
A Philippines’ 10-year global peso note issue attracted huge
demand and allowed the government to raise $750 million at a
yield lower than initial guidance.
As investors generally reduced exposure to risk assets,
safe-haven government bonds remained firm, with 10-year Japanese
government bond yields hitting a fresh
three-month low of 0.73 percent. Benchmark 10-year U.S. Treasury
yield steadied around 1.63 percent, after touching a
low of 1.618 percent on Thursday.
EURO OFF LOWS
The dollar was down 0.1 percent after hitting a two-month
high against a basket of major currencies of 81.001 on
Thursday. Rising demand for Treasuries on the back of the
looming U.S. fiscal crisis underpinned the dollar.
Gold rose to a three-week high of $1,737.60 an ounce,
up 3.6 percent on the week, its biggest weekly gain since the
end of January. Bullion is supported by expectations for a
continuation of ultra-easy U.S. monetary policy under President
Barack Obama’s second term, and on demand for safety due to
concerns about the U.S. fiscal woes.
The euro recovered, up 0.2 percent to $1.2773, having
fallen to a two-month low of $1.2717 on Thursday.
The euro was undermined after the European Central Bank kept
rates on hold on Thursday, as expected, and its president, Mario
Draghi, sounded downbeat on the euro zone economy and said he
was ready to start new purchases of bonds.
“Euro zone policymakers are just trying to buy time, which
is what they have been doing all along. So the euro faces
downside risks. I think it could test $1.25,” said a trader at a
European bank.
More worrying signs about the European economy emerged after
data showed German exports slid at their fastest pace since late
last year, adding to evidence that the euro zone’s debt crisis
has begun to inflict a heavy toll on Europe’s largest economy.
A coalition government in heavily indebted Greece still
needs to pass the 2013 budget in a vote expected on Sunday.
But Spain on Thursday successfully sold long-term debt to
complete its 2012 issuance programme, giving the government
breathing room to hold out before requesting international aid.
U.S. crude rose 0.4 percent to $85.41 a barrel and
Brent rose 0.2 percent to $107.45.
Sluggish equities kept sentiment weak in Asian credit
markets, widening the spread on the iTraxx Asia ex-Japan
investment-grade index by 5 basis points.
