* Nikkei down 1.5 percent
* Profit-taking seen in region
* Gold below record, up 0.5 percent today
By Sugita Katyal
SINGAPORE, April 19 Asian stocks fell on Tuesday
after rating agency Standard & Poor's lowered its U.S. credit
outlook to negative, prompting a global flight to other assets.
The euro nursed heavy losses early in Asia while the yen
gained across the board as worries about sovereign debt problems
in Europe and the United States prompted investors to unwind
Standard & Poor's threatened on Monday to downgrade the
United States' prized AAA credit rating unless the Obama
administration and Congress find a way to slash the yawning
federal budget deficit within two years.
S&P, which assigns ratings to guide investors on the risks
involved in buying debt instruments, slapped a negative outlook
on the country's top-notch credit rating and said there's at
least a one-in-three chance that it could eventually cut it. The
Dow Jones Industrial Average fell 1.1 percent to
"The overnight tumble of U.S. shares further deepened
investor worries about the pace of the U.S. economic recovery,"
said Simon Liu, deputy investment officer of Polaris Group's
asset management firm in Taiwan.
"In the longer term, foreign fund flows will go into
emerging markets and out of developed economies," said Liu.
Despite the downgrade in the outlook for U.S. sovereign
debt, U.S. Treasuries were mostly steady as other concerns, such
as falling stock prices, appeared to trump the outlook revision.
After an earlier sell-off, the 30-year bond was
10/32 higher in price and yielding 4.45 percent, down from 4.47
percent late Friday.
The gap between two-year note yields and 30-year bond yields
briefly hit a recent high of 384 basis points, or the largest
spread since March 17, but it was last at 379 basis points, up
from 377 basis points late on Friday.
Some analysts said the decline in Asian stocks was likely
profit-taking triggered by a global pull back in risk-taking due
to the long-term threat of a U.S. rating downgrade and
nearer-term fears of a Greek debt restructuring.
Japan's Nikkei stock average fell 1.5 percent after the S&P
cut with the benchmark Nikkei average down 142.66 points
at 9,413.99, while the broader Topix shed 1.35 percent
Outside Japan, MSCI's index of Asia-Pacific stocks
slipped further away from a nearly three-year
high hit last week. It was down 1.2 percent in early trade.
The euro fell to as low as 116.41 yen -- the
lowest since March 30. The dollar also underperformed the yen,
falling to a near three-week low around 82.16 , before
recovering slightly to last stand at 82.59.
The Australian and New Zealand dollars slipped on the U.S.
dollar and yen as falling stocks, escalating euro debt woes and
a credit warning for U.S. debt sparked a wave of risk aversion.
The Australian dollar slipped to $1.0465, from
$1.0510 late in New York and a high of $1.0572 on Monday. It
dipped as far as $1.0454 offshore after S&P's warning to
Spot gold rose as much as nearly 1 percent in early
morning trade, before trimming gains to $1,489.19 an ounce by
0303 GMT, up half a percent. In the previous session, gold
reached a record high of $1,497.20
NYMEX crude for May delivery CLc1, which expires on
Tuesday, was down 6 cents at $107.06 a barrel by 0035 GMT, after
settling down $2.54 at $107.12 a day earlier.
Brent crude for June LCOc1 fell about 0.4 percent to
$121.17 a barrel versus a $121.61 settlement in the previous
The Reserve Bank of Australia (RBA) painted an upbeat
outlook for the local and global economies in minutes of the
April policy-setting meeting released on Tuesday.
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(Editing by Richard Borsuk)