* MSCI Asia ex-Japan tumbles to fresh five-month low
* Dollar pulls away from two-month low against yen
* RBA decision awaited, with no policy change expected
By Lisa Twaronite
TOKYO, Feb 4 (Reuters) – Asian shares tumbled on Tuesday
though the dollar regained some footing, after disappointing
U.S. manufacturing data cast a pall over Wall Street and gave
investors little reason to hope for stability in emerging
markets after their recent rout.
MSCI’s broadest index of Asia-Pacific shares outside Japan
fell about 1.4 percent at its lowest level since
early September.
Japan’s Nikkei stock average lost 2.9 percent,
extending its declines into a fourth session.
But the greenback’s descent took a breather, with the dollar
index gaining 0.1 percent to 81.101.
Data showing U.S. manufacturing activity slowed sharply last
month dealt a heavy blow to markets already worried that the
U.S. Federal Reserve’s decision to taper its asset purchases
would lead to capital flight from emerging markets.
“Investors should steer clear of risk assets over the short
term as the turmoil does not look like it will be over anytime
soon,” Mitul Kotecha, the Hong Kong-based head of global foreign
exchange strategy for Credit Agricole, said in a note to
clients.
“A combination of tapering, a confluence of country-
specific emerging market concerns and weaker growth in China
provide the backdrop for a volatile few weeks if not longer,
ahead,” Kotecha added.
The yield on benchmark 10-year U.S. Treasury notes
stood at 2.587 in Asian trading, after falling as
low as 2.582 percent on Monday, the lowest since Nov. 1.
January’s sharp fall in U.S. output activity came on the
back of the biggest drop in new orders in 33 years, while
construction spending barely rose in December, suggesting the
U.S. economic recovery is more tenuous than some investors had
believed.
The data helped launch the benchmark S&P; 500 index on its
worst single-day drop in seven months, while the CBOE volatility
index soared 16.5 percent to close at its highest level since
December 2012.
That helped send the dollar as low as 100.77 yen and
the euro as low as 136.37 yen, levels neither pair
had touched since late November.
In Asian trading, the dollar took back some lost ground,
adding about 0.3 percent to buy 101.24 yen, while the euro rose
0.2 percent on the day to 136.84 yen.
The Australian dollar was slightly lower at $0.8738, as
investors awaited the Reserve Bank of Australia’s policy
decision due at 0330 GMT.
All analysts polled by Reuters expected the RBA to keep its
2.5 percent cash rate intact, although some said the central
bank might drop its easing bias.
On the commodities front, U.S. oil edged up slightly
to $96.53 a barrel, after plunging $1.09 on Monday as the
weaker-than-expected U.S. factory data fanned fears about demand
in the world’s largest economy.
The stock market selloff added to the safe-haven appeal of
gold, with spot gold edging up to $1,258.84 an ounce,
after gaining 1.1 percent on Monday.
