Asia stocks slip in long wait for U.S. jobs data

http://news.yahoo.com/s/nm/20090109/bs_nm/us_markets_global

HONG KONG (Reuters) – Asian stocks edged down and the U.S. dollar drifted higher on Friday, as investors braced for the December U.S. payrolls data, expected to show sharp job losses and dash hopes for a speedy recovery this year.

Major European stock markets were expected to open as much as 1 percent higher, according to financial bookmakers, after Citigroup agreed to support legislation that would let troubled borrowers save their homes through bankruptcy.

Analysts predict the world's largest economy probably shed more than half a million jobs last month, bringing job losses in 2008 to a post-war record, boding ill for Asia's struggling exporters who have been starved of demand from developed nations.

Global equities, emerging market currencies and high-grade credit had all benefited in the last month from a steady improvement in investors' risk tolerance. However, dour corporate outlooks, including from the world's top retailer Wal-Mart, and prospects for higher unemployment have curbed appetite for riskier assets.

"Market watchers are already prepared for bad news on the jobs front. They expect unemployment to have risen to 7 percent in December," said Linus Yip, strategist with First Shanghai Securities in Hong Kong. "But the real test is in how Wall Street will react to the news tonight."

The MSCI index of stocks in the Asia-Pacific region outside Japan inched down 0.2 percent, creeping further away from a one-month high reached on Wednesday.

Japan's Nikkei share average finished 0.45 percent lower, with big exporters such as Honda Motor Co and Canon Inc among the biggest drags on the index.

The scandal surrounding Indian IT company Satyam Computer Services sparked fears foreign investors may pull out of the country, especially so soon after attacks that paralysed Mumbai late last year. The chairman of the company resigned on Wednesday after saying that 94 percent of the cash and bank balances on the company's book at the end of September did not exist.

The BSE index was down 2 percent, and Satyam's stock was savaged, falling 50 percent.

NO CHOICE BUT CUT

South Korean stocks tied with Indian equities as the region's biggest decliners, with the benchmark KOSPI also down 2 percent after the country's central bank cut interest rates by 50 basis points to a record low and warned Asia's fourth-largest economy would slow further.

"The Bank of Korea has no choice but to cut interest rates, given a slowing economy. The economy probably contracted in the fourth quarter and the first quarter is seen worse," said Park Sang-hyun, chief economist with HI Investment & Securities in Seoul.

Policymakers in China, India and Korea were the most aggressive in Asia in trying to protect their economies as the worsening global downturn really bit into the region in the second half of 2008.

But other Asian central banks have lately had to step up their actions with export sectors gutted, domestic growth crippled and bank lending still sluggish. Taiwan unexpectedly slashed rates and Indonesia eased more than forecast this week.

Bond market investors meanwhile have been more focused on new global bond issuance, hungry for higher yields, particularly with credit markets showing signs of stabilization.

The cost of insuring investment-grade bonds against default or restructuring in Asia ticked up but remained much lower as investors bet massive fiscal stimulus plans and rock-bottom interest rates will eventually help global growth.

U.S. corporate debt proceeds of $19.9 billion in the first full week of 2009 were the highest since May 2008, according to Thomson Reuters data, as companies took advantage of the window of calm in capital markets to push through deals.

The budding enthusiasm has slowly peeled money away from U.S. Treasuries. The benchmark 10-year Treasury note yield was steady at 2.44 percent, but has climbed around 40 basis points since hitting a five-decade low late in 2008.

The 30-year bond yield was at 3.04 percent.

Japanese government bond futures ticked up 0.2 point after hitting a 1-month low on Thursday.

The dollar was little changed at 91.15 yen. The dollar hit a one-month high around 94.65 yen on Tuesday.

The euro fell 0.3 percent to $1.3660. The euro has bounced between $1.3964 and a three-week low of $1.3312 this week.

U.S. light crude oil for February delivery climbed above $42 a barrel, up 1.4 percent, as dealers tried to find a floor, thinking most of the bad news has been priced in.