* Asia ex-Japan shares head for fourth straight day of
* Japan's Nikkei tumbles 2.4 pct, Thai stocks fall to
* Gold climbs to near three-week high
By Dominic Lau
TOKYO, Jan 6 Asian shares fell to a three-week
low on Monday after growth in China's services sector slowed
sharply last month, raising concerns about the pace of recovery
in the world's second-largest economy, while safe-haven gold
The dollar hovered near a four-week high, supported by an
upbeat outlook for the U.S. economy from Federal Reserve
Chairman Ben Bernanke that supported expectations of faster
stimulus reduction by the U.S. central bank.
British, German and French shares
were expected to open steady to modestly softer, according to
MSCI's broadest index of Asia-Pacific shares outside Japan
shed 0.8 percent, reaching a three-week low and
adding to a 1.1 percent drop on Friday. The gauge lost 1.7
percent last year, sharply underperforming U.S., Japanese and
China's CSI300 index sagged 2.3 percent, hitting a
five-month low after the HSBC/Markit services sector Purchasing
Managers' Index fell to 50.9 in December from 52.5 in the
previous month, with new business expansion the slowest in six
months. The Chinese index is down 3.9 percent
since the start of the year, adding to last year's 7.6 percent
"The focal point of the Asian markets is more on Chinese
growth and on Chinese political situation and how it's going to
pan out this year, rather than worrying about how tapering will
affect Asia specifically," said Guy Stear, Asian credit and
equity strategist at Societe Generale in Hong Kong, referring to
the manufacturing PMI released last week.
South Korea's won hit a near six-week low of
1,067.7 to a dollar on China slowdown fears.
Driven by heightened political uncertainty ahead of next
month's general election, the Thai baht fell to a near
four-year trough of 33.11 per dollar and Thai stocks
dropped 1.1 percent after earlier falling by as much as 1.6
percent to touch a 16-month low.
In terms of valuations, Thai equities were relatively
expensive, with the 12-month forward price-to-earnings ratio of
11.9, slightly ahead of a five-year average of 11.4 and the MSCI
Asia-Pacific ex-Japan's 11.7, Thomson Reuters Datastream data
ROUGH START FOR NIKKEI
Japan's Nikkei stumbled 2.4 percent, marking its
worst one-day fall in two months, in the first trading day of
2014. The benchmark jumped 57 percent last year to log its best
annual rise since 1972 on the back of massive fiscal and
As Japanese equities took a beating, the yen got some
respite against the dollar, up 0.6 percent at 104.28 yen, not
far from a two-week high of 104.08 yen touched last Friday.
Against a basket of major currencies, the dollar
added 0.1 percent to near a four-week high set on Friday, helped
by Bernanke's comments.
Bernanke, who steps down as head of the Fed at month's end,
gave an upbeat assessment of the U.S. economy in coming
quarters, but he tempered the good news in housing, finance and
fiscal policies by repeating that the overall recovery "clearly
U.S. stocks ended last week slightly weaker, with the
Standard & Poor's 500 down 0.5 percent for the week after
it jumped 30 percent in 2013.
U.S. JOBS, ECB THIS WEEK
Friday's nonfarm payrolls data will give further clues as to
how well the U.S. economy is recovering and how fast the Fed
will unwind its stimulus campaign, which has been a major driver
for global assets in the past few years.
"With the Fed having set the tapering process in motion, it
would likely take a fairly significant miss to derail tapering
expectations and push yields significantly lower from their
year-end levels," analysts at BNP Paribas wrote in a note.
"Against this backdrop, the dollar is likely to remain
generally well-supported this week, particularly versus the
lower-yielding G10 currencies," they added.
Before the jobs report on Friday, investors will focus on
the minutes of the Fed's December policy meeting, due out on Jan
8, and the European Central Bank's policy gathering on Thursday.
The euro was down 0.1 percent at $1.3579, building on
the pervious session's 0.6 percent decline.
Among commodities, gold advanced 0.4 percent a near
three-week high of about $1,241 an ounce, heading for a fifth
day of gains. The precious metal suffered a 28 percent slump in
2013, its worst yearly performance since 1981, largely due to
the Fed's plan to unwind its stimulus programme.
U.S. crude futures edged up 0.1 percent to just above
$94 a barrel, coming off a four-week low set on Friday after
data showed a larger-than-expected build in distillates.