(Adds European open forecasts)
* MSCI index of Asia-Pacific shares ex Japan hit 1-mth low
* Spreadbetters expect higher/lower European open
* Focus on Fed Chair Yellen's testimony later in the day
By Shinichi Saoshiro
TOKYO, May 7 Asian shares stumbled to a
one-month low and the safe-haven yen hovered just below a
multi-month high against the dollar on Wednesday as the
heightened possibility of Ukraine slipping into civil war
depressed risk appetite.
Ukraine has so far experienced its deadliest week since the
separatist uprising began, leaving less room for peace efforts.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.7 percent after touching its lowest point
since April 2. Japan's Nikkei lost 2.5 percent, tracking
Tuesday's fall on Wall Street.
The grim situation in Ukraine is expected to weigh on
European shares, with spreadbetters predicting Britain's FTSE
100 to open as much as 0.3 percent lower, Germany's DAX
to fall 0.28 percent and France's CAC 40 was
seen off 0.29 percent.
The dollar, which has lost about 0.5 percent against the yen
so far this week, traded at 101.59 yen. A break below
101.32 would take the dollar to its lowest since Mar. 19.
The U.S. currency was also on the back foot against the
euro, which was boosted on Tuesday by upbeat PMI readings in
Spain and Italy. The euro was at $1.3925, hovering within
distance of an eight-week high of $1.3952 hit on Tuesday.
The U.S. dollar index, which measures the greenback
against six major currencies, stood at 79.13 after falling on
Tuesday to 79.06, its lowest in more than six months.
"The point going forward is whether U.S. stocks can retain
their relatively steady footing should their European
counterparts suffer from higher tensions in the Ukraine," said
Junichi Ishikawa, market analyst at IG Securities in Tokyo.
"If U.S. stocks can stay firm, it can help limit any selling
stemming from the crisis to sporadic profit-taking and underpin
global equity markets," he said.
The S&P 500 fell 0.9 percent on Tuesday but remains
within striking distance of a record high hit a month ago.
Immediate focus for the dollar was on U.S. Federal Reserve
Chair Janet Yellen's congressional testimony later in the
Yellen is widely expected to maintain a dovish policy
stance, doing little to arrest the recent fall of the dollar,
which has shown a limited response to positive economic data.
"Fed Chair Yellen is likely to dodge any questions
pertaining to the specific timing of interest rate rises, given
the furore after her suggestion at a press conference in March
that rates might rise about six months after asset purchases
end," analysts at Capital Economics wrote in a note to clients.
Expectations that the Federal Reserve will not raise
interest rates soon in addition to safe-haven bids have kept
U.S. Treasury yields low, hurting the dollar.
The U.S. Treasury 10-year note yielded 2.586
percent after touching a three-month trough of 2.57 percent on
In the commodities markets, oil edged up after crude stocks
decreased, defying expectations for an increase, with
geopolitical risks helping put a floor under prices.
"The market is balancing a weak fundamental picture against
the worry that we could see a disruption in Russian supplies,"
said Gene McGillian, analyst at Tradition Energy in Stamford,
U.S. crude was up 0.6 percent at $100.08 a barrel.
Nickel hovered near a 15-month high as worries persisted
about supply from major producers Russia and Indonesia, while
stainless steel buyers also fuelled the rally.
Three-month nickel on the London Metal Exchange
(LME) touched a session high of $18,700 a tonne, coming within
grasp of a 15-month peak of $18,715 hit late in April.
Copper slipped amid worries of slowing growth in China,
although signs that a U.S. recovery is taking hold limited
losses. LME copper slipped 0.3 percent to $6,700.00 a
(Editing by Eric Meijer)