* MSCI Asia ex-Japan down 0.4 pct, trims earlier losses
* Nikkei turns higher as yen falls to 2-month low vs dollar
* Japan's exports fall more than expected in September
* Euro resilient despite mixed signals on debt crisis
* European shares likely to decline
By Chikako Mogi
TOKYO, Oct 22 Asian shares fell on Monday as
lacklustre earnings from leading U.S. companies and a sharp drop
in Japan's exports, a key driver of the world's third-biggest
economy, dented risk appetites and prompted investors to take
profits on recent gains.
The euro, however, crept higher after Spanish Prime Minister
Mariano Rajoy secured backing for his austerity drive in a vote
in his home region of Galicia on Sunday, a result seen taking
Madrid a step closer to asking for international aid.
Asian equities followed Wall Street, which had its worst day
since late June on Friday when barometers of the overall U.S.
economic health, General Electric and McDonald's,
dissappointed investors with their results.
Analysts said this provided an excuse for profit-taking in
Asian stock markets, many of which had rallied to multi-month
highs recently on new global central bank easing and the
European Central Bank's plan to buy bonds of struggling euro
zone countries that ask for aid.
The MSCI index of Asia-Pacific shares outside Japan
fell 0.4 percent but trimmed earlier losses.
South Korean shares fell 0.2 percent, recovering from an
earlier drop of over 1 percent while Australian shares
also curbed earlier losses to fall 0.6 percent.
Hong Kong shares bucked the trend and inched up 0.2
percent, hovering near a seven-month high touched last week,
with bourse operator Hong Kong Exchanges (HKEx) strong
on expectation that further capital inflows into the territory
could buoy trading activity.
U.S. stock futures were up 0.3 percent to hint at a
firm Wall Street open, but European shares will likely decline,
with financial spreadbetters expecting London's FTSE 100
, Paris's CAC-40 and Frankfurt's DAX to
open down as much as 0.6 percent.
"Profit-taking is overshadowing buying because any forward
momentum has been exhausted," Oh Tae-dong, an analyst at Taurus
Securities in Seoul wrote in a note to investors. He said he
expects the Korea Composite Stock Price Index to hover around
current levels for the time being.
The Korea's index was still up around 9 percent from lows
hit in late July. The index hit a 5-month high in September.
Australian shares scaled a 15-month high last week and the
benchmark index was up nearly 6 percent since a low on Sept. 5.
"After a rally of several weeks, buying tends to run out of
steam while profit takers become more trigger happy," said CMC
markets analyst Ric Spooner.
Japan's Nikkei average turned positive, gaining 0.2
percent as the yen fell to a two-month low against the dollar,
The dollar hit a two-month high of 79.60 yen, as a
break above a key technical level spurred further buying.
Data on Monday showed that, year-on-year, Japan's exports in
September fell at their fastest rate since the February 2011
earthquake, and the mood among manufacturers was at its lowest
since early 2010.
The reports reinforced concerns that Japan may slide back
into recession as sales to China and Europe sag amid the global
slowdown and domestic demand, led by rebuilding from last year's
disaster, loses momentum.
A Reuters poll showed that China, the world's second-largest
economy, could stage a tepid economic rebound in the fourth
quarter on higher public infrastructure spending, though growth
will remain lethargic through 2013.
U.S. crude erased earlier losses to rise 0.5 percent
to $90.52 a barrel and Brent added 0.6 percent to
Weaker equities weighed on Asian credit markets, pushing out
the spread on the iTraxx Asia ex-Japan investment-grade index
wider by 4 basis points.
MIXED SIGNALS IN EUROPE
The euro was resilient despite mixed signals from the
euro zone over the progress of its three-year debt crisis,
trading up 0.3 percent at $1.3053.
Germany raised new hurdles on Friday to using the euro
zone's rescue fund to inject capital directly into ailing banks
from next year, limiting the impact of a key agreement by
European Union leaders on Thursday to establish a single banking
supervisor from 2013.
But Spain and Greece were still expected to get aid,
possibly next month and improving investor confidence was
evident in government bond yields for highly-indebted Italy and
Spain, which tumbled on Friday to multi-month lows after
successful debt sales in both countries.
Some indicators were more cautious as investor focus turned
to the corporate earnings seasons now under way in the United
The CBOE Volatility index, a gauge of expected
volatility in the S&P, jumped 13.5 percent to close at 17.06 on
Friday. It hit a five-month high earlier on Friday.
Spot gold recovered from a fresh six-week low of
$1,713.39 an ounce hit earlier, and last traded up 0.4 percent
at $1,726.16 on bargain hunting.