* China premier comments quash any additional stimulus hopes
* Fed officials offer no fresh clues on timing of stimulus
* Investors await U.S. GDP, payrolls data later this week
* Euro under pressure ahead of Thursday's ECB meeting
* Australian shares extend gains after RBA holds steady as
By Lisa Twaronite
TOKYO, Nov 5 Asian shares sagged on Tuesday
after hawkish comments from China's premier ahead of a key
Communist Party meeting, though expectations that the U.S.
Federal Reserve will maintain its stimulus for a while limited
The euro continued to languish on rising expectations that
the European Central Bank will cut rates further, with a few
expecting the ECB to take action as early as its Thursday
European shares were tipped to open slightly higher, with
financial spreadbetters expecting Britain's FTSE 100 to
open 17 to 18 points higher, or as much as 0.3 percent;
Germany's DAX to gain 9 to 23 points, or up to 0.3
percent; and France's CAC 40 to add 4 to 8 points, or as
much as 0.2 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan
slipped about 0.2 percent, though Japan's Nikkei
stock average bounced off its lows and managed a 0.2
Australian shares bucked the downtrend, shrugging
off the China concerns and ending up 0.8 percent. Shares moved
back toward last month's five-year high after the Reserve Bank
of Australia kept its cash rate steady at a record low of 2.5
percent as widely expected.
The Shanghai Composite Index also erased early
losses and was up 0.2 percent, though Kong's Hang Seng Index
was down 0.4 percent.
Premier Li Keqiang said in speech published in full late on
Monday that adding extra stimulus would be more difficult since
printing new money would cause inflation. China needs 7.2
percent economic growth to generate 10 million jobs, Li said in
the speech, which was delivered on Oct. 21.
"His comments are different from what people were expecting.
He definitely sounds more hawkish now and this is a shift from
what he said earlier this year about bottom-line growth," said
Hong Hao, chief strategist, Bank of Communications
Li's remarks were published as China's leaders prepare to
meet from Nov 9 to Nov 12 at a Communist Party plenum at which
major reform drive has been foreshadowed.
Concerns over China's prospects were tempered by a private
survey on Tuesday which showed growth in the service sector
edged up in October, indicating further stabilisation in the
world's second-largest economy.
U.S. S&P E-mini futures edged slightly higher, after
the S&P 500 Index closed up 0.4 percent on Monday, just
shy of a record high, as a spate of comments from Federal
Reserve officials offered investors no reason to believe a
rollback of the U.S. stimulus programme was imminent.
Eric Rosengren, president of the Boston Fed, said late on
Monday that it may be appropriate to reduce the quantitative
easing program when there is "compelling evidence of a
sustainable recovery making satisfactory progress toward full
Earlier on Monday, St. Louis Fed President James Bullard
said the central bank need not rush because inflation remains
low, while Fed Board Governor Jerome Powell said the tapering
timing "is necessarily uncertain, as it depends on the evolution
of the economy."
ECB, U.S. PAYROLLS REPORT AWAITED
The dollar index, which measures the greenback
against six major currencies, gained 0.1 percent to 80.624,
holding well above a nine-month low of 78.998 hit on Oct. 25.
Against the Japanese currency, the dollar fell about 0.1
percent to 98.47 yen.
The euro slipped 0.1 percent to $1.3501, holding
above Monday's low of $1.3441, which was its lowest since Sept.
18, but remaining well below a nearly two-year high of $1.3832
set on Oct. 25, as investors began to price in the likelihood of
ECB easing action.
Money markets were already pricing in the possibility of
looser ECB policy in the coming year and began to show a chance
of a cut in the next few months -- a few big banks expect a cut
as early as this week.
A rate cut would hurt the euro's yield advantage over other
currencies and make it less appealing for investors.
"We expect the ECB to leave its interest rates and forward
guidance unchanged at Thursday's meeting," strategists at
Barclays wrote in a note to clients.
"However, the latest decline in inflation has raised the
likelihood that the main refinancing rate could be cut again by
25 basis points in December," they added.
The ECB last lowered its refinancing rate in May, to a
record low of 0.5 percent.
In addition to the ECB, investors will continue to focus on
U.S. data for clues on the timing of when the Fed will begin to
taper its monthly purchases of $85 billion in assets.
On Friday, the closely-watched October non-farm payrolls
data will be released. Fed policymakers want to see the
unemployment rate dropping closer to 6.5 percent from the
current 7.2 percent, but economists in a Reuters survey expect
the rate to have edged up in October to 7.3 percent.
Ahead of the jobs report, third-quarter gross domestic
product data will be published on Thursday. Those figures will
help show how strong the momentum in the economy was before last
month's partial government shutdown.
Data on Monday showed orders for a wide range of U.S.-made
capital goods fell more than expected in September, suggesting
companies cut their investment plans. But other recent data
indicated that factory activity accelerated in October.
In commodities trading, spot gold edged up 0.1
percent to $1,315.59 an ounce. Copper added 0.7 percent
to $7,196.75 a tonne from the previous session, when it fell 1.4
U.S. crude also inched up 0.1 percent to $94.72 a
barrel, but stuck close to four-month lows touched on Monday on
worries about growth in demand after a survey showed U.S. oil
inventories were rising.