* Spreadbetters predict a mixed start to European trading
* Investors warily eye Thailand martial law declaration
* Nikkei bucks the downtrend and snaps 4-day losing streak
* Declining trend in U.S. Treasury yields keeps pressure on
By Lisa Twaronite
TOKYO, May 20 Asian shares slipped on Tuesday
despite a solid performance on Wall Street, while the dollar
wallowed close to its lowest level against the yen in more than
Spreadbetters predicted a mixed start to the European
trading day, with Britain's FTSE 100 seen opening as
much as 0.09 percent higher; Germany's DAX flat to 0.05
percent higher; and France's CAC 40 0.2 percent lower.
Europe is "in for a choppy open," IG market strategist Stan
Shamu said in a note. "The opening calls are quite mixed with
the periphery facing mild weakness."
MSCI's broadest index of Asia-Pacific shares outside Japan
slipped about 0.3 percent. But Japan's benchmark
Nikkei stock average bucked the downtrend and tracked
overnight gains on Wall Street, ending up 0.5 percent and
breaking a four-session losing streak.
Asian investors continued to monitor developments in
Thailand, following news the army had declared martial law after
six months of anti-government protests. The SET index
pared early losses but was still down about 0.8 percent.
The declaration of martial law was intended to restore peace
and order and does not constitute a coup, deputy army spokesman
Colonel Winthai Suvari told Reuters.
Thailand's baht initially fell against the dollar
but later steadied on what dealers suspected was intervention by
the country's central bank.
Fitch Ratings said martial law was not in itself negative
for Thailand's ratings and could be positive for the economy.
"It may even help to break Thailand out of the political
deadlock of the past six months, by which the two sides have
failed to agree on arrangements for new elections," said Andrew
Colquhoun, its head of Asia-Pacific Sovereigns.
BOJ ON DECK
The dollar was slightly lower against the yen after dropping
to its lowest in more than three months overnight. It last
bought 101.44 yen, down about 0.1 percent on the day.
It dipped as low as 101.11 yen on Monday, its weakest level
since early February, as investors bet that the Bank of Japan
will keep policy steady.
The BOJ is set to conclude its latest two-day policy meeting
on Wednesday. Governor Haruhiko Kuroda has maintained an
optimistic view of the Japanese economy, keeping expectations of
further policy easing at bay.
"If Kuroda makes dovish comments tomorrow, then the
dollar/yen may manage to stay above the 200-day average. But if
he intentionally stresses his optimistic economic views, markets
will take it as a sign he accepts a higher yen and a fall in
stocks," said Osamu Takashima, head of FX strategy at Citigroup
Securities in Tokyo.
The recent decline in U.S. Treasury yields made dollar-based
investments less attractive.
The yield on benchmark U.S. 10-year notes inched
up to 2.54 percent in Asia from its U.S. close of 2.53 percent
on Monday, but remained close to six-month lows marked on
Thursday last week.
On Monday, Dallas Federal Reserve President Richard Fisher
and San Francisco Fed President John Williams both reinforced
market expectations that the U.S. central bank is in no hurry to
hike interest rates.
Minutes of the Federal Reserve's last policy meeting are
scheduled to be released on Wednesday, but are unlikely to give
investors any solid clues about the timing of a U.S. interest
The euro remained under pressure of its own, after European
Central Bank officials signalled that further easing steps are
likely to come next month.
The common currency was flat on the day at $1.3708,
but remained not far from its low of $1.3648 hit on Thursday,
which was its lowest since late February.
In commodities trading, U.S. crude inched up slightly
to $102.73 per barrel after the weaker dollar lifted it close to
a one-month high in the previous session.
Spot gold was steady at $1,292.04 an ounce.
(Additional reporting by Hideyuki Sano in Tokyo; Editing by
Eric Meijer & Kim Coghill)