* MSCI Asia ex-Japan in ranges, Nikkei falls 0.9 pct
* Euro eases 0.1 percent vs dollar
* Firmer dollar weighs on gold while Brent recovers
* European shares likely mixed
* Spanish debt auction awaited (around 0840 GMT
By Chikako Mogi
TOKYO, April 19 Asian shares and the euro traded
in tight ranges on Thursday ahead of a Spanish bond sale seen as
a key test of investors' risk appetite amid renewed concerns
over the euro zone's debt crisis.
European shares were also expecting a mixed start, with
financial spreadbetters predicting that major European markets
would open between down 0.2 percent and
up 0.2 percent. U.S. stock futures were up 0.1 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan
edged 0.1 percent lower, spending the session
vacillating in a band between up 0.2 percent and down 0.2
percent. Australian shares outperformed with a 0.4
percent gain, helped by mining and energy stocks as oil prices
Japan's Nikkei average slid 0.9 percent, taking its
cue from a fall in U.S. stocks on Wednesday as uninspiring
earnings from tech bellwethers IBM and Intel
gave investors a reason to take profits a day after Wall
Street's best gains in a month.
"I would expect a narrow range in today's trading because
traders will have a 'wait and see' approach ahead of tonight's
Spanish 10-year bond auction," said Miguel Audencial, trader at
CMC Markets. "The result will give a good indication on how the
market will perform in the next few days."
Spain will auction two- and 10-year bonds later on Thursday
(around 0840 GMT), after drawing stronger-than-expected demand
for shorter-dated debts on Tuesday. Its 10-year government bond
yield shot above 6 percent earlier this week, raising fears that
the country would not be able to manage its public financing and
would have to turn to an international bailout.
Doubts over Europe's ability to stick to harsh measures to
slash high public debts began to grow when Spain abruptly
relaxed its deficit targets earlier this month. Italy then said
on Wednesday its priority was now to revive economic growth,
delaying by a year its budget balancing goal.
Bank of Spain data showed on Wednesday how sliding house
prices and a looming recession hit the financial sector, with
Spanish banks' bad loans rising to their highest level since
Oct. 1994 in February.
The euro eased 0.1 percent to $1.3112 while the
dollar rose 0.1 percent against the yen at 81.33. A
firmer dollar measured against a basket of major
currencies pushed spot gold down 0.3 percent to $1,637.
"The upside is very heavy because the euro remains under
pressure and the weak physical demand isn't helping," said Peter
Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
In addition to the test of market confidence in Spain's
restructuring efforts, there are several key factors that could
set the tone for the euro and risk appetite in coming weeks.
One is the two-round presidential election in France
starting on Sunday, with opinion polls showing French President
Nicolas Sarkozy facing a tough challenge from Socialist Francois
Hollande, who has a double-digit lead for a May 6 runoff.
"If the first round results show Sarkozy losing, it could be
seen by markets as raising the probability of him losing on May
6, putting at risk the close cooperation between France and
Germany in resolving the euro zone crisis," said Ayako Sera, a
senior market economist at Sumitomo Trust and Banking.
"It is difficult for investors to tip the balance of risks
either way. The euro is holding relatively firm despite the
uncertainties, but that's because investors have already built a
high level of euro short positions and are sidelined," she said.
Markets, jittery about EU capacity to prevent Spain's fiscal
woes from spreading to vulnerable peripheral euro zone
economies, eyed the role played by the European Central Bank,
which maintains that governments must act to tackle their fiscal
reforms, not rely on action from the central bank.
ECB policymaker Jens Weidmann reiterated that view in an
interview with Reuters.
Europe urgently needs to bolster its fragile safety net, and
global finance ministers meeting in Washington later this week
could agree on the amount by which they will boost the
International Monetary Fund's financial firepower to help
supplement Europe's rescue scheme.
The United States, which will not spend any more money of
its own, on Wednesday threw its support behind commitments by
other nations to boost the IMF's financial resources.
Oil futures recovered, with Brent rising 0.3 percent
at $118.26 a barrel while U.S. crude pared earlier gains
to inch down 0.1 percent at $102.58.
Asian credit markets weakened, with the spread on the iTraxx
Asia ex-Japan investment-grade index widening by 2