GLOBAL MARKETS-Asian shares wither as Wall Street pulls back

Wed Jun 25, 2014 12:14am EDT

* U.S. crude firms as investors warily watch Iraq developments

* Report that U.S. could be loosening ban on crude exports aids oil rally

* Wall St retreats from record touched on upbeat U.S. data

By Lisa Twaronite

TOKYO, June 25 (Reuters) - Asian shares fell on Wednesday, echoing losses on Wall Street as concerns about escalating violence in Iraq eclipsed stronger economic data.

U.S. Secretary of State John Kerry urged leaders of Iraq's autonomous Kurdish region on Tuesday to stand with Baghdad in the face of a Sunni insurgency, as security forces fought the rebels for control of the country's biggest oil refinery.

A senior U.S. intelligence official said that the insurgents were "well positioned" to hold a broad swathe of territory captured in northern and western Iraq unless the Baghdad government can muster a counter-offensive.

MSCI's broadest index of Asia-Pacific shares outside Japan fell about 0.4 percent, while Japan's Nikkei stock average lost 0.5 percent.

S&P futures eased on Wednesday, pointing to a weak start on Wall Street.

In volatile U.S. trading on Tuesday, the S&P 500 closed down more than half a percent in its sharpest loss since June 12, after earlier setting a fourth record high in five sessions following upbeat U.S. economic data.

Sales of new homes surged 18.6 percent to a seasonally adjusted annual rate of 504,000 units in May, the highest since May 2008 and the biggest increase since January 1992. Separate data from the Conference Board showed its index of consumer attitudes rose to 85.2 in June from a downwardly revised 82.2 in May.

But U.S. Treasury prices shrugged off the brighter data and yields fell, with the benchmark 10-year rate dropping to 2.575 percent in Asia from its U.S. close of 2.586 percent.

A trio of Fed officials gave investors no reason to believe the central bank's stance had changed. William Dudley, president of the New York Fed, said the U.S. central bank can wait to raise interest rates until mid-2015 without risking an undesirable rise in inflation.

San Francisco Fed President John Williams said on Tuesday that the U.S. economy is about two years from being "normal," while Philadelphia Federal Reserve Bank President Charles Plosser said the economy continues to improve, making steady rather than exuberant progress.

With no help from U.S. Treasury yields, the dollar edged down about 0.1 percent to buy 101.89 yen, while the euro also inched about 0.1 percent lower to 138.63 yen.

"Overall, the yen looks better bid unless the Bank of Japan comes up with its next easing plan," said Bart Wakabayashi, head of forex at State Street in Tokyo.

Despite the BOJ's confidence that it will meet its inflation target next year without further stimulus, most economists still believe it will need to ease policy again by December, according to a Reuters poll published on Wednesday.

Japanese Prime Minister Shinzo Abe unveiled a package of measures on Tuesday aimed at boosting Japan's long-term economic growth, though market impact was muted.

The common currency was steady on the day at $1.3605.

The dollar index also consolidated at 80.312, solidly within the 80.000-81.000 range in which it has been stuck since May.

Crude oil markets were mixed as traders weighed the likelihood of supply disruptions from Iraq.

U.S. prices rose on a Wall Street Journal report that the government has allowed two companies to export ultra-light oil known as condensate, a first step that effectively loosens a 40-year ban on most U.S. crude exports.

U.S. crude for August delivery advanced about 0.7 percent to $106.73 a barrel, after spiking as high as $107.50 early in the session.

Brent crude for August fell 0.2 percents to $114.28.

"Oil prices have been unusually stable in recent years, but events in Iraq are causing a reassessment of medium-term oil market fundamentals that we expect to translate into a phase of higher long-term prices and more volatile trading conditions," strategists at Barclays said in a note to clients.

"Geopolitical risks have replaced China's growth and Fed policy as the main concerns for investors," they said.

Spot gold slipped about 0.4 percent To $1,311.80 an ounce, after spiking to a more than two-month high of $1,325.90 on Tuesday. (Additional reporting by Shinichi Saoshiro; Editing by Shri Navaratnam & Kim Coghill)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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