Asian stocks fall on darker outlook for global growth

SINGAPORE: Asian shares fell on Friday and the safe-haven dollar
stayed near its highest in a week-and-a-half as fears about global
growth rose in the wake of weak manufacturing data from the United
States, Europe and China.
A long-expected downgrade to the
credit ratings of 15 of the world's biggest banks by ratings agency
Moody's added to the gloom, which also weighed on commodities and
currencies such as the Australian dollar that are linked to resource
demand.
"If you give me $1 million, I won't put more than half
of that into the market right now, and even what I do put in will be
for the short term," said Larry Jiang, chief strategist at Guotai Junan
International Securities in Hong Kong.
"The U.S. is clearly not
in as good a shape as people thought even a month ago. We still don't
know if China has found a bottom and there's Europe," he added.
European
markets were expected to follow Asia's downbeat lead, with
spreadbetters calling the main indexes in London <.FTSE>, Paris
<.FHCI> and Frankfurt <.GDAXI> to open down around 0.9
percent. <.L> <.EU>
MSCI's broadest index of Asia
Pacific shares outside Japan <.MIAPJ0000PUS> fell 1.5 percent,
dropping into negative territory for the week, and Tokyo's Nikkei share
average <.N225> lost 0.2 percent.
Analysts at Citi said
Asian stock markets outside Japan had suffered $1 billion in
redemptions in the seven-day period that ended Wednesday, the biggest
factor in a net outflow of $243 million from global emerging market
equity funds.
U.S. stocks fell around 2 percent on Thursday,
racking up Wall Street's worst loss in three weeks, after a survey
showed U.S. factory growth at its slowest in 11 months in June.
That
followed data showing the euro zone's private sector shrank at its
fastest pace in three years this month, while Chinese manufacturing
contracted for an eighth straight month.
Losses on Wall Street worsened after a bearish call from Goldman Sachs,
which advised clients to bet on further falls in the broad S&P 500
index <.SPX> on expectations of more weakness in the economy.
"We
are recommending a short position in the S&P 500 index with a
target of 1,285," (roughly 5 percent below current levels), Goldman
said in a note.
S&P 500 index futures traded in Asia were up
0.2 percent on Friday, pointing to a slight rebound when the market
resumes trading.
COMMODITIES SLIDE
The darkening outlook
for the world economy has sparked a sharp sell-off in commodities this
week, with Brent crude oil falling below $90 a barrel for the first
time in 18 months.
Brent crude rebounded 0.6 percent to $89.78 a barrel on Friday, but remained down 8 percent on the week.
"Manufacturing
is a key indicator of oil demand, and based on the data coming out of
the United States it doesn't look good, even though prices have been
coming off," said Ben Le Brun, a Sydney-based market analyst at OptionsXpress.
Copper
eased 0.5 percent, after tumbling in the previous session, to trade
just above $7,300 a tonne, on course for its seventh weekly loss in the
past eight weeks.
The dollar was
steady against a basket of major currencies <.DXY>, after gaining
nearly 1 percent on Thursday in its biggest rally in more than three
months.
"Investors sought shelter in safe haven
assets after the Moody's downgrade, which reminded them that the euro
zone problems have morphed into a very serious global crisis," said a
senior spot trader at a major Japanese bank based in Tokyo.
The
euro was traded around $1.2553, up 0.1 percent on the day but well off
the week's peak of $1.2748 scaled on Monday. The Australian dollar
bought $1.005, having dropped more than 1.3 percent from Thursday's
high of $1.0205.
Gold slipped 0.1 percent to around $1,565 an
ounce, after falling 2.5 percent on Thursday to wipe out almost all its
2012 gains as worries over the global economy robbed the precious metal
of its inflation-hedge appeal. - REUTERS