RPT-GLOBAL MARKETS-Asian stocks fall on recovery doubts

* Stocks fall after U.S. confidence hits post-March low

* Oil and copper prices weaken on economic pessimism

* China stocks at 7-week low

* Australian and New Zealand dollars hurt by risk aversion (Repeats to additional subscribers)

By Umesh Desai

HONG KONG, Aug 17 (Reuters) - Asian stocks slid after a further deterioration in U.S. consumer confidence cast doubts about the pace of the global economic recovery and soured appetite for risky assets.

Investors sought the safety of U.S. Treasuries after data from the world's largest economy showed consumer confidence fell more than expected in early August, dropping to its lowest level since March.

Even after data released on Monday showed Japan's economy became the third G7 country after Germany and France to pull out of recession, investors continued to shun growth-linked currencies such as the Australian and New Zealand dollars.

Japan's economy grew 0.9 percent in the three months to June, ending its longest recession since World War Two as expected, but analysts say recovery in the world's No.2 economy could lose steam when a temporary boost from government stimulus peters out.

Japan's Nikkei share average <.N225>, slumped 2.2 percent, pulling away from a 10-month high struck on Friday which also boosted government debt prices with the September 10-year JGB futures <2JGBv1> hitting their highest since end-July.

"Today's data was driven by stimulus steps in Japan and overseas, so Japan's economy is far from self-sustaining growth," said Kyohei Morita, chief economist for Japan at Barclays Capital.

Commodity bulls retreated, ending the sizzling rally in oil and copper prices, which were largely fuelled by optimism the global economy had turned a corner.

Oil prices extended their steep losses made on Friday, when they fell by the biggest margin since end-July, to trade below $67 to a barrel and Shanghai copper futures was limit down, ending last week's four-day rally.

Oil had rallied for four straight weeks, while copper prices had their biggest weekly rise in over two months last Friday.

MSCI LOSSES

The sell-off in Asian stocks was broad-based with financials, industrials and materials providing the biggest drag on the MSCI index of Asia Pacific shares traded outside Japan <.MIAPJ0000PUS> which was down 2.2 percent and within striking distance of the month's low.

Still, the index is up 75 percent since March 9, when the global equity rally began on hopes the worst of the economic slump was over and that the growing signs of recovery would lead to a brighter outlook for corporate earnings.

China stocks, which have been driven in recent weeks by the optimism the world's third biggest economy would pull the rest of the world out of the economic slump, fell to a 7-week low.

The Shanghai Composite Index <.SSEC> fell to 2,946.068 points, down 3.3 percent and extending last week's 6.6 percent drop, as investors worried that this year's rally had been overdone. Still it up 63 percent year to date.

The decline comes on the back of its biggest weekly drop in five months on Friday with worries about additional share supplies from IPOs adding to concern over monetary policy and bank lending.

Monday's wave of risk aversion also hurt demand for higher yielding currencies like the Australian and New Zealand dollars, which are closely linked to commodity prices.

The Aussie was well off an 11-month high of $0.8479 struck on Friday, trading around $0.8229, while the kiwi hovered around $0.6710.

Safe havens like U.S. Treasuries extended last week's gains with the 10-year Treasury notes yielding 3 basis points (bps) lower at 3.54 percent as enthusiasm about the economic recovery waned and confidence grew the Federal Reserve will keep interest rates near zero and maintain its quantitative easing policy for a long time. (Editing by Kazunori Takada)