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GLOBAL MARKETS-Banks weigh on Asian shares, dollar steady

Published 12/21/2009, 02:12 AM

* Asian shares lose grip on gains, though Nikkei up

* Bank shares weigh while techs helped by RIM, Oracle

* Dollar holds firm near 3-month highs on euro

By Charlotte Cooper

TOKYO, Dec 21 (Reuters) - Asian share markets struggled to hold early gains on Monday, with bank shares pressuring some lower even as tech stocks gained, while the dollar held steady on the yen and hovered near a three-month high on the euro.

In Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were expected to open as much as 0.7 percent up, reassured by export data out of Japan, which rose the most in seven years last month.

Shares in Hong Kong and Shanghai slid as financial and property stocks fell on concern China would take steps to cool the property market, while banks such as HSBC eased on worries they made need to make provision against exposure to debt in Dubai.

Debt-ridden conglomerate Dubai World is expected on Monday to ask key creditors for more time to pay off loans.

Seoul shares ended 0.17 percent lower, with banks including KB Financial Group weighing but gains in technology exporters such as LG Electronics lending support.

"Banks are under pressure amid recent news flows pointing to a tighter regulatory environment, potentially worsening net interest margins," said Kwak Joong-bo, a market analyst at Hana Daetoo Securities.

Banks face having to set aside more funds or raise fresh capital in as little as three years, according to proposals by a global regulatory body that could change the way they do business.

The MSCI index of Asian stocks excluding Japan fell 0.5 percent.

Bucking the trend were Japan and Taiwan, which both finished higher, while

The Nikkei average closed up 0.4 percent as stocks such as chip-tester maker Advantest Corp gained.

"Investors welcomed solid earnings results from Oracle and (BlackBerry maker) Research in Motion over the weekend, as well as a weaker yen," said Norihiro Fujito, general manager of investment research at Mitsubishi UFJ Securities in Tokyo.

"But trading volume is becoming thin as the year-end draws near and the market could easily turn south if the yen strengthens again."

Upbeat results from Oracle and Research In Motion helped boost the Nasdaq on Friday, which ended up 1.45 percent.

The Dow Jones industrial average closed up 0.20 percent and the Standard & Poor's 500 Index rose 0.58 percent.

Australian stocks slipped 0.3 percent but top airline Qantas Airways Ltd jumped after flagging a return to profit.

Banking shares were mostly lower after leading a rise of nearly 47 percent in the benchmark share index from a five-year low reached in early March.

DOLLAR HOLDS PATTERN

The dollar hovered near its highest point in more than three months against the euro as traders anticipated more year-end dollar short-covering until the Christmas break later this week.

A brighter outlook for the U.S. economy after stronger figures on the job market and retail sales earlier this month has helped the dollar pull back from a long-running downtrend.

"The dollar may extend gains a little more as momentum buyers could chase the dollar up while it stays in an uptrend," said Masafumi Yamamoto, chief FX strategist for Barclays Capital in Japan.

The euro was steady at $1.4344 after dipping to $1.4262 on Friday, its lowest since early September. The dollar was unchanged at 90.40 yen, after touching its strongest level for six weeks on Friday.

U.S. crude futures edged down, paring Friday's 1 percent rise after news Iranian troops had partly withdrawn from a disputed oil area claimed by both Tehran and Baghdad, easing tensions between two major crude exporters. NYMEX crude for January delivery was down 13 cents at $73.23 a barrel.

U.S Treasury debt prices were steady while Japan's five-year government bond yield fell to a four-year low, following comments last week by the Bank of Japan that it would not tolerate deflation. (Additional reporting by Jungyoun Park in Seoul, Denny Thomas in Sydney; Editing by Kazunori Takada)

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