RPT-GLOBAL MARKETS-Asia stocks slide ahead of G20, dollar steady

* Stocks down 4th day, focus on regulations, recovery

* Japan's Nikkei closes below 25-day moving average

* Leading indicators sew caution about second half outlook (Repeats to additional subscribers with no change to text)

By Kevin Plumberg

HONG KONG, June 25 (Reuters) - Asian stocks fell for a fourth straight session on Friday, driven by expectations of tighter financial regulation ahead of the weekend G20 meeting and uncertainty about the global economic recovery.

Major European stocks were expected to edge up as much as 0.5 percent after three days of selling, financial bookmakers said, though investor conviction was low after discouraging outlooks from U.S. retailers overnight.

Part of the weakness in Asia was attributable to profit-taking after a powerful rally in risky assets on Monday on the back of China's decision to unpeg the yuan.

However, differences among Group of 20 leaders ahead of a summit in Toronto over how to secure the economic recovery caused investor concern, particularly with leading indicators reflecting a slowdown ahead. [ID:nN24260273]

"The fundamental backdrop has not significantly changed of late, which could mean risk aversion persists as we finish the first half of the year," Gareth Berry, currency strategist with UBS in Singapore, said in note.

"Risk sentiment could remain unstable as investors may be increasingly worried on growth prospects in the U.S., which could weigh on demand conditions for commodities and equities in turn."

Japan's Nikkei share average <.N225> led equity market declines in Asia, falling 1.9 percent to close below its 25-day moving average in what was seen as a negative short-term signal for Japanese stocks. Index heavyweights such as Fanuc <6954.T> and Canon <7751.T> saw their shares drop 4.6 percent and 4.5 percent, respectively.

The MSCI index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> fell 1.4 percent, dragged down the most by the technology and resource-related sectors.

Financials outperformed slightly on the day though not on the week, with talk of a bank tax expected to be among the topics discussed at a G20 summit in Toronto over the weekend.

For the week, the Asia-Pacific index was largely unchanged. In a reversal of sectoral performance for most of the year, the industrial and materials segments, which includes mining stocks, outperformed, while IT was the biggest underperformer.

TOUGHER RULES FOR BANKS?

Australian miners such as BHP Billiton were down. The industry got a boost on Thursday after a dramatic slide in support for the government, largely because of a 40 percent tax on mining companies, ushered into power a new prime minister for Australia. [ID:nSGE65O00M]

Hong Kong's Hang Seng <.HSI> was down 0.6 percent, with HSBC <0005.HK> biggest drag on the market.

U.S. lawmakers on Friday neared a breakthrough in their historic rewrite of financial regulations, agreeing to tough new limits on banks' trading activity and even floated a compromise on the stubborn issue of derivatives. [ID:nN25155960]

U.S. stocks <.SPX> ended about 1.7 percent lower overnight and have dropped nearly 4 percent this week, underperforming European <.FTEU3> and Japanese <.N225> shares by a wide margin. Retailers and banks were under pressure throughout the session.

With world leaders increasingly speaking about fiscal austerity, investors have seriously questioned the implications for growth.

Indeed, U.S. new home sales plunged by a record 33 percent in May from April and the Baltic Exchange's sea freight index <.BADI>, which is used as a leading economic indicator, was down 39 percent so far in June, on track for the biggest monthly decline since October 2008.

Goldman Sachs economists said in a note that global growth will slow to a 4 to 4.5 percent pace in the second half from a 5 to 5.5 percent quarter-on-quarter annualised pace in the first half.

Currencies were hemmed into tight trading ranges on Friday, with the euro at $1.2335 , well off a four-year low of $1.1875 hit on June 7.

Beijing set the yuan's daily mid-point at the highest since the July 2005 revaluation, pushing it up 0.6 percent this week. However, market reaction was limited, with many traders resigned to the view that the yuan's appreciation in the spot market will be slow and managed.

Oil and copper both drifted lower on concerns about the economic growth outlook, while gold also eased as early buying linked to weak stock markets subsided. (Editing by Lincoln Feast)