* MSCI Asia ex-Japan hits fresh 4-week low, Nikkei touches
* Euro/dollar steadies, dollar/yen eases
* Aussie sits near 5-week lows vs USD, 8-week low vs euro
* European shares likely edge higher
By Chikako Mogi
TOKYO, Aug 31 Asian shares fell to four-week
lows on Friday as investors cooled expectations that U.S.
Federal Reserve Chairman Ben Bernanke will offer any signal of
more monetary stimulus at a speech before fellow central bankers
later in the day.
European equities were expected to be marginally higher,
with financial spreadbetters calling London's FTSE 100,
Paris's CAC-40 and Frankfurt's DAX to open up
as much as 0.2 percent.
Bernanke's speech at 1400 GMT at the annual Jackson Hole,
Wyoming, gathering precedes the Fed's Sept. 12-13 policy
meeting, with market views mixed over whether the Fed would
provide a shot in the arm, and if so, whether it would be a
forceful quantitative easing or something else.
Investors squared positions ahead of this week's biggest
event to limit losses on recently oversold assets such as the
Australian dollar and shares, which took a hit from slumping
prices for iron ore, Australia's biggest export earner, due to
concerns over demand weakening on slowing global growth.
"We go into the Jackson Hole conference with the market
adjusted to more reasonable expectations of what Ben Bernanke
will deliver. We would even go as far as saying that traders
could be expecting to be disappointed," said Chris Weston,
trader at IG Markets.
MSCI's broadest index of Asia-Pacific shares outside Japan
was down 0.1 percent and was set for a monthly
drop of about 1 percent, swinging into the red from July's 3.5
Japan's Nikkei stock average slid 1.4 percent to a
Australian shares recovered from Thursday's 0.9
percent loss to inch up 0.1 percent while the Aussie
traded at $1.0291, holding off a five-week low of $1.0276 hit on
Thursday. But it traded near an eight-week low against the euro.
The euro steadied at $1.2506 while the dollar edged
down 0.2 percent to 78.47 yen.
Sentiment was still underpinned by hopes central banks will
take additional easing measures to support fragile global
growth, but investors have shifted focus to China's slackening
economy and uncertainty over Europe's plan to tackle its debt
Data published on Friday showed Japan's industrial output
unexpectedly fell in July while Japanese manufacturing activity
contracted in August to the lowest level in 16 months.
"Markets will remain in a holding pattern until policy
decisions are made in the United States and Europe, but even so,
that won't solve the underlying structural problem which has
deterred investors from fully returning to a 'risk on' mode,"
said Tetsuro Ii, CEO of Commons Asset Management, referring to
the euro zone's protracted debt crisis.
"Worries over global demand deceleration are also
heightening, with emerging economies becoming sluggish," he
GRABBING SHRINKING PIES
China's official manufacturing managers' index due out on
Saturday may have eased to a 9-month low of 50 in August,
supporting the case for fresh easing measures by the central
The monthly U.S. jobs report due on Sept. 7 could shed more
light on the Fed's next policy decision.
The German constitutional court ruling on the region's
bailout funds due on Sept. 12 could affect the implementation of
the European Central Bank's planned bond-buying scheme aimed at
driving down soaring borrowing costs in struggling countries
such as Spain and Italy.
Euro zone finance ministers meet on Sept. 14-15 while
Greece's crucial bailout depends on a positive review by
international lenders of its austerity reforms due by early
As markets mark time with persistent bias for more stimulus,
assets will become even more expensive, with investors seen
likely flocking to limited opportunities.
"While easy money does little for growth, investors will
continue to be squeezed out of 'safe' assets and drawn to
corporate debt, equities and 'foreign stuff'. The Fed will
continue to help asset prices and undermine the dollar," said
Kit Juckes, currency strategist at Societe Generale.
EUROPE MAKING NOISE
Even if Bernanke fails to give any clues on the possible
policy decision next month, investors could still look to the
ECB's concrete action to soothe euro zone bond market jitters.
Although the ECB may map out details of its bond-buying
scheme as early as its Sept. 6 policy meeting, it may not
intervene before it is satisfied that the euro zone's permanent
rescue fund is operational.
Spain, faced with snowballing regional debts which were
threatening the sovereign financing and fuelling speculation the
country may need to seek a bailout, has ruled out such an option
until aid conditions are made clear.
As Europe struggles on its way to fiscal consolidation, a
German newspaper reported that the European Commission plans to
give the ECB oversight of all banks in the euro zone, a move
that could help break the "vicious" link between the euro zone's
debt crisis and struggling banks.
Oil steadied, with U.S. crude and Brent both
up 0.1 percent to $94.72 and $112.73 a barrel respectively.
Asian credit markets were subdued, with the spread on the
iTraxx Asia ex-Japan investment-grade index wider
by 1 basis point.