* U.S. lays groundwork for possible action against Syrian
* Turkish lira hits record low vs USD; yen broadly firmer
* Oil supported by risk to supply disruption
* European equities set to open lower
By Ian Chua
SYDNEY, Aug 27 Asian stocks fell on Tuesday and
the the Turkish lira hit a record low after the United States
signalled possible military action against the Syrian government
over a suspected chemical weapons attack last week.
Dealers said there was no panic selling though, just
truncated trading as investors waited nervously to see how the
European stocks were seen opening lower, with the Eurostoxx
50 futures, Germany's DAX futures and France's
CAC 40 futures all down.
"The apparent certainty that military action against Syria
is on its way has traders highly uncertain about what the
repercussions will be for igniting a powder keg in such an
already volatile region," said Jonathan Sudaria, a sales trader
at London Capital Group.
"Naturally, traders will be shying away from risky assets
until there is some clarity about the future path of military
intervention from the West," he said in a trading note.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 1.2 percent, reversing Monday's 0.4 percent
rise. Tokyo's Nikkei ended 0.7 percent lower, while the
safe-haven yen rose broadly.
Emerging markets were hit harder with Philippines stocks
down 4.3 percent, while Indonesian shares slid
3.1 percent to one-year lows.
"It's a risk-off story because of Syria and also if you see
broad repatriation from emerging markets currencies, the yen
will benefit," said Michael Turner, strategist at RBC.
Both the dollar and euro lost ground against the Japanese
currency with the greenback easing 0.4 percent to 98.15 yen
, while the euro declined by 0.5 percent to 131.12 yen
U.S. Secretary of State John Kerry, in the most forceful
reaction yet to the Aug. 21 gas attack outside Damascus, said
President Barack Obama "believes there must be accountability
for those who would use the world's most heinous weapons against
the world's most vulnerable people."
Kerry said Obama was consulting with allies before he
decides on how to respond. His comments saw U.S. stocks
end 0.4 percent lower in light volumes on Monday.
The risk of supply disruption lifted Brent crude above $111
a barrel to five-month highs. It last traded up 0.3
percent at $111.06 a barrel. U.S. crude gained 0.3 percent to
Hit by heightened concerns over neighbouring Syria, the
Turkish lira slumped to a record low around two to
The lira was already under pressure with investors pulling
out of emerging markets to position for a post-stimulus world
with many betting the U.S. Federal Reserve will start reducing
its bond-buying programme next month.
In Asia, the Indian rupee and the Malaysian ringgit
were notable movers. The rupee hit a record low at 65.71
per dollar, while the ringgit reached a three-year low around
3.3300 per dollar.
"It's has been a tough time for many emerging market
currencies over recent weeks," said Greg Gibbs, currency
strategist at RBS.
"The timing of the taper almost appears less relevant now,
just the fact that the Fed is thinking it is likely to happen
over the next year appears to be enough."
Brazil's finance minister said the Fed has communicated its
plans to reduce monetary stimulus "poorly", prompting some of
the wild swings in the value of currencies and stocks in
emerging market economies.
Senior Chinese officials on Tuesday urged the Fed to
consider when and how fast it would unwind stimulus to avoid
harming emerging market economies.
Investors also gave commodities a wide berth with copper
shedding 0.4 percent to $7,332 a tonne.
Gold slipped to $1,399 an ounce, having reached an
11-week peak above $1,406 on Monday. It has rallied more than
$200 since the end of June when prices troughed at three-year
lows and traders suspect some profit-taking is in order.