* MSCI Asia ex-Japan falls to near two-week low, materials
* End-month, end-quarter, Japan fiscal first-half
adjustments set flows
* Yen near one-week high vs dollar, bids seen at 77.50 yen
* Euro falls to two-week lows vs yen, dollar
* European shares likely to decline
By Chikako Mogi
TOKYO, Sept 26 Asian shares and commodities fell
on Wednesday as investors turned their back on perceived
stimulus effects from central bank easing, focusing instead on
Europe's fiscal challenges as Spain faces bitter protests
against budget austerity measures.
Flat U.S. stock futures hinted at a steady Wall
Street open, but financial spreadbetters expected London's FTSE
100, Paris's CAC-40 and Frankfurt's DAX
to open down as much as 1 percent.
"Despite ample liquidity in the market, investors remain
concerned about whether economic fundamentals are really
improving," said Kim Hak-kyun, an analyst at Daewoo Securities.
Flows were also driven by accounting calendar adjustments,
with this weekend seeing the month-end, the end of the
July-September quarter, and in Japan, the fiscal first half.
The MSCI index of Asia-Pacific shares outside Japan
slid 1 percent to its lowest since Sept. 14,
giving back nearly all the gains made after markets across
riskier asset classes cheered the U.S. Federal Reserve's
aggressive new job-boosting stimulus.
The European Central Bank said earlier this month it would
buy the bonds of struggling euro zone states if they requested
aid, while the Bank of Japan followed the Fed's example by
increasing bond buying to help support the economy.
But market rallies have quickly been overtaken by concerns
about deteriorating world economies.
"The markets are feeling, as if they didn't know before,
that the magic of central bank stimulus is only to boost
sentiment - not to fix fundamentals," a financial markets expert
The MSCI index's materials sector led the
declines with a 1.8 percent drop. U.S. crude fell 0.6
percent to $90.79 a barrel and Brent eased 0.6 percent
to $109.83. London copper shed 0.9 percent to $8,204 a
Australian shares fell 0.3 percent, as concerns over
the global economic recovery dampened China's demand for
industrial metals, a major export sector for Australia.
"The reason that these (stimulus) packages have to be
pursued is because the underlying level of industrial production
and economic growth is very weak," said Ben Lyons, an investment
analyst at ATI Asset Management.
YEN, DOLLAR GAIN
Tokyo's Nikkei average slipped 1.9 percent to a
two-week low, as a mass of stocks passed the deadline for buyers
to gain rights to first-half dividends.
A further drop in Japanese stocks could fuel speculation
about yen-weakening intervention by Japanese authorities to help
shore up first-half book closing, keeping traders wary of
testing the dollar's downside against the yen, said Yuji Saito,
director of foreign exchange at Credit Agricole in Tokyo.
"Selling and buying forces both lack strong momentum, but
the market is biased towards selling, with the euro capped by
its own problems and the dollar top-heavy against the yen," he
The euro hit two-week lows against the yen and the dollar,
briefly dipping below 100 yen and falling 0.3 percent
The yen traded at 77.72 yen, near a one-week high of
77.655 hit on Tuesday, and heavy bids placed at 77.50 yen
against the dollar may spur a blip above 78 yen, Saito said.
The dollar index measured against a basket of
currencies rose to a two-week high, capping gains in spot gold
which was up 0.1 percent to $1,762.06 an ounce.
EVENTFUL WEEK FOR SPAIN
Protests flared up in Spain on Tuesday ahead of the planned
announcement of a new round of unpopular austerity measures for
the 2013 budget on Thursday. Spain will also likely set a fresh
timetable for economic reforms later this week.
Markets are closely watching Madrid's ability to control its
finances, with ballooning regional debts crippling the
government's refinancing efforts. The country is also subject to
a ratings review by Moody's Investors Service.
Prime Minister Mariano Rajoy is holding back from seeking a
sovereign bailout, which would set the stage for the ECB to
start buying high-yielding Spanish bonds to ease the country's
European news and economic data may provide daily trading
incentives but markets will largely stick to recent ranges as
investors are unwilling to bet on direction until the U.S.
presidential election on Nov. 6, said Goro Ohwada, president and
CEO at Japan-based fund of hedge funds, Aino Investment Corp.
"Unless it becomes clear which camp is going to win, and
unless there is a significantly bad news, nobody's going to take
the risk of hastily bailing out of markets. Rather, they are
trying to bring their positions close to neutral so they can
move quickly after the election result," he said.
Asian credit markets weakened along with other markets, with
the spread on the iTraxx Asia ex-Japan investment-grade index
widening by 6 basis points.