Asian stocks fall, investors retreat to bonds

SINGAPORE, May 23 (Reuters) Stocks in Asia fell again on Tuesday, extending heavy selling in global share markets as investors concerned about a slowdown in U.S. growth fled emerging markets to less risky assets.

Safe havens such as government bonds rallied, and the yield on the five-year Japanese government bond fell below the psychologically important 1.3 percent level for the first time since early April.

European and U.S. bonds also rose, while in emerging markets -- such as Russia, Latin America and India -- stocks, bonds and currencies plummeted on investor concerns about prospects for higher interest rates and slumping commodity prices.

The dollar ticked up but stayed shy of a two-week high versus the yen struck in the previous session, with investors nervous about how long the sell-off would continue.

Gold and oil rebounded as commodities staged a modest rebound from last week's sell-off.

Uncertainty about the outlook for U.S. interest rates, continued to worry investors, helping accelerate a correction in the Tokyo market after multi-year peaks hit in April.

''The market will remain jittery unless the New York market stabilises and gives us some relief,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities.

The Nikkei average fell 1.38 percent, and MSCI's broadest measure of non-Japan Asian shares dipped 0.23 percent.

The declines in Asia, followed more heavy falls from Europe to the Americas. The Dow Jones industrial average finished the day down 0.17 percent, while the Nasdaq Composite Index lost almost 1 percent.

ASIA HURTS Market watchers waited anxiously to see how India's main stock market benchmark would open after trading was halted on Monday following a 10 percent drop. The BSE index ended down about 4 percent, the lowest in almost three months.

Stock indexes and currencies in Asia's emerging markets have suffered as higher U.S. interest rates scare investors averse to risk.

Slower U.S. economic growth could be particularly hurtful to the export-oriented Asian economies.

''The Korean economy depends on exports, particularly to the U.S.

and China, and if the U.S. slows down, that means Korean exports will be hurt,'' said Cho Seong-joon, an analyst at Meritz Securities in South Korea.

Technology stocks in Asia's big economies fell on declines in their U.S. counterparts, particularly weighing on Seoul's benchmark KOSPI which hit an eight-week low in early trade. At 0205 GMT, the index was down around 1 percent.

Taiwan Semiconductor Manufacturing Co. dragged Taiwan's benchmark index, while Canon Inc. and other tech stocks also lost ground in Tokyo.

Japan's Mitsubishi UFJ Financial Group Inc. (MUFG) also sank on a lower-than-expected profit outlook, with the world's biggest banking group by assets, dropping nearly 5 percent.

On Monday, it reported a group net profit of 1.18 trillion yen (.5 billion), the largest ever for a Japanese bank, but said its profit would likely fall 36 percent this year to 750 billion yen, short of analysts' expectations.

Selling also hit two other banks due to report full-year earnings on Tuesday --- Sumitomo Mitsui Financial Group (SMFG) and Resona Holdings Inc.

The ongoing slide in Tokyo share prices saw Japanese government bonds, seen as a relative safe haven, rise for a third straight session.

The 10-year yield edged down 0.5 basis point to 1.825 percent after it fell to 1.810 percent, its lowest level since early April.

It hit a near seven-year high of 2.005 percent earlier in the month.

At 0233 GMT, the dollar edged up to 111.65 yen from near 111.55 yen in late New York trade but was off the two-week high of 112.95 yen.

The dollar surged more than 1 percent against the yen on Monday only to give up all those gains by the end of New York trade, while investors switched funds into the safe-haven Swiss franc.

Oil futures rose above as Venezuela mooted OPEC oil production cuts and the U.S. government predicted another stormy Atlantic hurricane season. U.S. light crude oil was trading at .35 a barrel at 0235 GMT.

Gold rose as much as 1 percent as buying interest resurfaced following the metal's fall the previous day to its lowest in nearly four weeks. At 0235 GMT, spot gold was at 2.10/662.90 an ounce, up from 5.60/656.40 late in New York.

REUTERS CH VA VV0942