* European shares seen opening down, on track to snap
* Spike in China's short-term rates underscores tightening
* Nikkei tumbles 2 percent, reversing rise as yen jumps
* Fed tapering expectations pushed to next year after
* U.S. 10-year Treasury yield wallows at lowest levels since
By Lisa Twaronite
TOKYO, Oct 23 Asian stock markets surrendered
early gains on Wednesday on fears of tighter policy in China,
while the dollar dropped after tepid U.S. jobs data vanquished
expectations that the Federal Reserve will taper its stimulus
before next year.
European markets were tipped to open lower and could snap
their nine-session winning streak.
Financial spreadbetters predicted Britain's FTSE 100
will open 15 to 23 points lower, or as much as 0.3 percent;
Germany's DAX will open 13 to 27 points lower, also
down as much as 0.3 percent; and France's CAC 40 will
open 12 to 22 points lower, or as much as 0.6 percent.
U.S. S&P 500 E-mini futures were down 0.3 percent,
after the S&P 500 Index closed at a record high in New
York on Tuesday.
Japan's Nikkei share average ended down 2 percent as
a stronger yen took a heavy toll, after shares touched a 3-1/2
week high in the morning session.
Australian shares shed 0.3 percent after scaling a
five-year peak, dragged down by stronger-than-expected inflation
data which reduced expectations for another interest rate cut.
MSCI's broadest index of Asia-Pacific shares outside Japan
was down 0.4 percent, on track to post its first
loss in five sessions, while profit-taking pushed Seoul shares
off their highest level in more than 26 months.
"A story that Chinese banks have tripled debt write-offs in
the first half of this year appears to have prompted some profit
taking with Asia markets near multi-week highs," Michael Hewson,
chief market analyst at CMC Markets UK, wrote in a research
A rise in China's short-term money rates also
underscored investors' fears that regulators there are poised to
tighten liquidity to quell growing inflationary pressures.
The benchmark seven-day repo contract, which had
been steadily sliding since Oct. 9, spiked in the morning
session, a day after a policy adviser to the People's Bank of
China (PBOC) told Reuters that the authority may tighten cash
conditions in the financial system to address inflation risks.
Most Asian markets had firmed in early trade, tracking Wall
Street gains as the weak jobs report reinforced expectations
that the Fed will maintain its aggressive stimulus well into
The report showed nonfarm payrolls increased by 148,000
workers in September, less than expected.
It suggested the economy was losing momentum even before the
U.S. fiscal standoff that partially shut down the government
for more than two weeks, lending credence to the central bank's
decision to hold off on reducing its stimulus.
Strategists at Barclays pushed out their expectation for the
first Fed tapering in the pace of its asset purchases to March
2014 from December 2013, and many market participants concurred.
Nine of 15 U.S. primary dealers surveyed by Reuters on
Tuesday expect the Fed to begin tapering its $85 billion-a-month
bond-buying programme in March.
DOLLAR UNDER PRESSURE
The dollar tumbled 0.7 percent against its Japanese
counterpart to 97.40 yen, after as low as 97.25 yen
earlier, its lowest since Oct. 9.
The euro was slightly down at $1.3773, after rising
as high as $1.3793 on the EBS trading platform, its strongest
since Nov. 2011.
In the near-term, the dollar could see further weakness
against other major currencies such as the euro and sterling,
said Sim Moh Siong, FX strategist for Bank of Singapore, adding
that the euro may rise towards levels around $1.39.
"I think there's certainly a high possibility that dollar
weakness might extend a bit further, but I'm not really sure
that it changes the medium-term dollar picture," Sim said.
The dollar index last stood at 79.217, after it fell
to its weakest in eight months at 79.137 earlier, within sight
of its 2013 low of 78.918 touched in February.
The Australian dollar was last down 0.6 percent against its
U.S. counterpart in a whipsaw session that saw it jump about a
quarter of a U.S. cent after the CPI report.
The yield on benchmark 10-year Treasury notes
fell to 2.492 percent, its lowest since late July, after closing
U.S. trade at 2.512 percent.
That helped push the yield on the 10-year Japanese
government bond to a five-month low of 0.600 percent.
On the commodities front, concerns about a near-term U.S.
crude surplus helped push U.S. crude prices down about
0.5 percent to $97.82 a barrel. Brent crude gave up 0.3
percent to $109.70 a barrel, supported by a weaker dollar.
Copper slipped from near one-month highs as traders
booked profits after the U.S. jobs report reinforced the metal's
weak fundamental outlook, falling 1.0 percent to $7,261.75.
Gold fell 0.2 percent lower to $1,336.51 an ounce,
having risen to a four-week high after the payrolls data.