Nikkei leads Asian stocks fall on US outlook

By Staff
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SINGAPORE, Apr 12 (Reuters) Asian stocks fell on Thursday, with Japan's Nikkei nursing one of the biggest declines as technology shares slid, dented by concern about the economic outlook for the United States and a rise in oil prices.

The euro gained against the yen, hitting an all-time high as investors waited on clues from the European Central Bank later in the day on whether interest rates will be lifted further.

Japanese government bonds dipped after minutes from the US Federal Reserve's March policy meeting hinted that more monetary tightening might be needed.

Tokyo's Nikkei index was down 1.1 percent by the midsession, dragged down by technology shares, such as Advantest Corp and Canon Inc., which both lost about 2 percent. The United States is one of the biggest markets for Japanese goods.

Sanyo Electric Co. Ltd. also lost 2 percent after saying it was set to book a 2-billion-yen loss for the year that just ended to cover part of the cost to recall mobile phone batteries.

Stock indexes fell across Asia after the US Federal Reserve hinted at the need for further interest rate rises, added to worry about the risks of inflation and slower economic growth.

''At the moment, there's little chance of an immediate hike in US interest rates, but this will be something that will continue to create some uncertainty,'' said Kim Hak-kyun, an analyst at Korea Investment and Securities.

MSCI's broadest index of shares elsewhere in Asia was down 0.2 percent by 0210 GMT.

Seoul's benchmark Korea Composite Stock Price Index (KOSPI) was down 0.1 percent, while Australia's S&P ASX 200 dipped 0.1 percent, led by declines in top miners and U.S.-linked firms such as shopping mall operator Westfield Group.

Singapore's Straits Times fell 0.8 percent while Taiwan's benchmark index was 0.3 percent lower.

DOW SHIVERS The Dow Jones industrial average and the Nasdaq Composite Index both lost 0.7 percent, weighed down by concerns over the US economy and a spike in gasoline futures ahead of the summer driving season.

The drop in the blue-chip Dow average is its biggest daily percentage fall since March 28. The Dow had risen for eight straight sessions, its longest string of gains in four years.

''The Fed news was not good. You're really in a box here. At this point, it seems your 'best case' scenario is an inflationary environment and your worst case is a stagflationary environment,'' said Emanuel Weintraub, managing director of Integre Advisors, in New York.

The yen lost ground on Wednesday as well after the International Monetary Fund's chief economist said the fund supported Japan's loose monetary policy and didn't see any need for ''heavy-handed intervention'' to limit the carry trade.

The euro jumped to 160.74 against the yen hitting an all-time high since its launch in 1999 for a third straight day. The ECB meets later in the day and is widely expected to keep rates on hold, but investors are looking for it to possibly signal that rates will rise by June or possibly as soon as next month.

The dollar was steady at 119.44 against the yen.

NYMEX crude for May delivery was down 14 cents at .87 by 0211 GMT, having risen on concern of a potential supply crunch when drivers hit the roads this summer.

The rising concern over fuel stocks came against the backdrop of tensions between the United States and oil exporter Iran, and production cuts by OPEC.

REUTERS SKB KN1049

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