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GLOBAL MARKETS-Japan stocks lead Asia lower; euro stabilises

Published 12/09/2009, 02:40 AM

* Risk-takers pause ahead of U.S., China data on Friday

* Tech shares lift S.Korea, Taiwan stocks

* Euro recovers after hitting 1-month low vs dollar

By Kevin Plumberg

HONG KONG, Dec 9 (Reuters) - Japan led a slide in Asian stock markets on Wednesday as worries about the strength of a global recovery prompted investors to trim some bets ahead of the year end, while the euro picked up from a one-month low on bargain hunting.

Major European stocks were expected to open roughly steady, according to financial bookmakers, after a 1.6 percent decline in the FTSEurofirst 300 index on Tuesday after Greece's sovereign credit rating was downgraded.

Focus among investors was shifting from disappointing U.S. results and debt rating concerns to November U.S. retail sales and a deluge of Chinese economic data due on Friday to gauge how strong the global recovery really is.

Though a large downward revision to Japanese economic growth in the third quarter was not expected to herald another recession, it was a sobering reminder of how weak demand and deflation are hounding Asia's largest economy.

"Japan's GDP data came in below expectations, and this does give the impression that things aren't looking too good for the economy just down the road," Noritsugu Hirakawa, a strategist at Okasan Securities in Tokyo.

Japan's Nikkei share average finished 1.3 percent lower, down a second day after a blistering rally in the first week of December lifted the index to its highest in about five weeks.

The MSCI index of Asia Pacific stocks outside Japan slipped 0.6 percent, with the materials sector the biggest drag.

The Thomson Reuters index of Asia ex-Japan equities was also down 0.6 percent.

Stock markets in both South Korea and Taiwan bucked a declining trend and rose 0.4 percent. Exporters in both economies have been adding to market share and have seen exports grow on an annual basis in November for the first time in more than a year.

The euro traded in a narrow range after a three-day decline against the U.S. dollar. It was steady at $1.4703.

Greece's rating downgrade gave dealers enough of a reason to push the euro to a one-month low below $1.4680, but dealers in the Asian session were quick to support it.

Since hitting a 15-month low on Nov. 26, the ICE Futures U.S. dollar index, a measure of its value against six other major currencies, has risen 3 percent. The index was steady on the day at 76.235.

Government bonds in the region rose as money flowed from falling equity markets and investors chose safety after Moody's cut ratings on six government-run companies in Dubai.

"The news increased nervousness surrounding Dubai, with its credit default swaps widening, but we continue to believe that any major problems there will be of local or regional nature and will not shake global markets," Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong, said in a note.

Ten-year Japanese government bond futures rose 0.3 point to 140.36, withing striking distance of a 20-month high reached on Dec. 1.

U.S. crude futures rose 73 cents to $73.15 a barrel after industry data showed a surprise drawdown in U.S. inventories, after a five-session streak of losses chopped $6 off oil prices.

(Additional reporting by Elaine Lies in TOKYO; Editing by Neil Fullick)

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