GLOBAL MARKETS-Asian shares, euro fall on uncertainty over Greek bailout

Chikako Mogi
Reuters Middle East

* MSCI Asia ex-Japan falls but Nikkei hits 2-month high on

weaker yen

* Yen hits 7-month low vs dollar, briefly hits 6-month low

vs euro

* European officials keep Greece waiting on bailout deal,

euro falls

* Oil rebounds on absence of Gaza ceasefire despite hopes

* European shares likely inch down

TOKYO, Nov 21 (Reuters) - The euro skidded on Wednesday and

Asian shares fell after European officials failed to reach a

deal on another bailout for Greece, a day after Federal Reserve

Chairman Ben Bernanke highlighted the dangers of a U.S. fiscal


U.S. stock futures eased 0.4 percent, pointing to a

weak Wall Street open.

Financial spreadbetters predict London's FTSE 100,

Paris's CAC-40 and Frankfurt's DAX would open

down as much as 0.2 percent, following weakness in Asia.

The euro slumped 0.5 percent to $1.2752, extending

losses and retreating from Tuesday's two-week high of $1.28295.

The euro's decline lifted the dollar up 0.3 percent against

a basket of key currencies and weighed on commodities

such as gold, which eased 0.3 percent to $1,722.70 an


Euro zone finance ministers and Greece's international

lenders will gather again on Monday. Their meeting in Brussels

ended on Wednesday without an agreement on the next tranche of

loans to Greece, as they haggled over myriad options on how to

bring the country's debt down to a sustainable level, without

which emergency aid cannot be disbursed to Athens.

"The euro is being sold because markets had believed the

ministers would agree on aid for Greece at today's meeting,"

said Yuji Saito, director of foreign exchange at Credit Agricole

in Tokyo.

"Instead, a settlement is postoned, highlighting the

difficulty of getting consensus on the debt crisis. But I feel

this is a typical European political show and an agreement will

be reached."

The bearish news from Europe dragged down Asian shares,

whose two-day rise had already been stalled after Bernanke on

Tuesday repeated a warning that failure to avoid the $600

billion "fiscal cliff" in expiring tax cuts and government

spending reductions could lead to recession in the United


The Fed chief said worries over how budget negotiations will

be resolved were already damaging growth.

Concerns about the United States failing to raise its debt

ceiling rattled financial markets in August 2011 and prompted

Standard & Poor's to cut the top-notch U.S. government bond

rating for the first time ever.

"The price action suggests market participants are unclear

of what to make of recent developments and therefore this

warrants some caution," said Stan Shamu, strategist at IG


But Hirokazu Yuihama, a senior strategist at Daiwa

Securities, said that for all the concerns over the fiscal

cliff, most of the market expected the U.S. Congress and White

House to reach a compromise to avert the crisis.

MSCI's broadest index of Asia-Pacific shares outside Japan

slipped 0.2 percent. Hong Kong shares

bucked the falling trend but pared earlier gains to rise 0.5

percent while Shanghai shares inched up 0.3 percent.

Japan's Nikkei stock average closed up 0.9 percent

at a two month-high as exporters were buoyed by a weaker yen.

The yen has come under pressure on expectations that a

general election on Dec. 16 will result in victory for an

opposition leader who wants the Bank of Japan to aggressively

ease monetary policy to stem the economy from further



Daiwa's Yuihama said concerns over third-quarter earnings

have subsided as most Asian companies had already reported


"This has prompted investors to turn to economic

fundamentals. Signs of recovery in the U.S. and China are

offering some assurances that the global economic slump may not

be as severe as previously feared, even if growth remains

fragile," Yuihama said.

Investors will now focus on HSBC China flash PMI for

November due on Thursday to see whether a low point for China,

the world's second largest economy, is over. U.S. manufacturing

figures are due later on Wednesday while those from Europe are

due on Thursday.

Trading activity was slowing ahead of the U.S. Thanksgiving

long weekend.

Going into the holiday, the dollar has been underpinned

broadly by data indicating a moderate U.S. recovery taking root,

while the yen remained under pressure, with more data showing

Japan's economy struggling.

Japan's exports fell 6.5 percent in October from a year ago,

dropping for a fifth consecutive month, weighed down by

weakening global demand and a territorial row with China, its

main customer.

In the U.S. on Tuesday, a report showed housing starts rose

to the highest rate in more than four years in October.

The dollar rose to a 7-1/2-month high against the yen of

81.975 yen while the euro briefly touched a peak of

105.05 yen, its highest point since May 4.

A retreat in shares dragged oil lower, although prices

remained supported by a lack of ceasefire between Israelis and

Palestinians, which raised concerns about supply disruptions

from the Middle East.

U.S. crude futures pared earlier gains and were up

0.1 percent to $86.85 a barrel by midafternoon, and Brent crude

also trimmed earlier rises and wasup 0.2 percent at


Weak appetite for riskier assets also interest in Asian

credit markets subdued, with the spreads on the iTraxx Asia

ex-Japan investment-grade index tightening by 1

basis point.

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