(Updates market levels, new quotes, adds forecasts for European
* Spreadbetters see softer open for European shares
* U.S. crude firms as investors warily watch Iraq
* Wall St retreats from record touched on upbeat U.S. data
By Lisa Twaronite
TOKYO, June 25 Asian shares fell on Wednesday,
echoing losses on Wall Street as concerns about escalating
violence in Iraq eclipsed stronger U.S. economic data.
The gloom was likely to spread to European trading, where
financial spreadbetters expected Britain's FTSE 100 to
open as much as 0.6 percent lower, Germany's DAX down
0.5 percent, and France's CAC 40 to weaken 0.7 percent.
"The bears look to be firmly in control and leaning heavily
on that sell button as we expect to see a fairly large gap
lower, given current volatility, on the open for the major
European indices," Capital Spreads trader Jonathan Sudaria wrote
in a note to clients.
U.S. Secretary of State John Kerry urged leaders of Iraq's
autonomous Kurdish region on Tuesday to stand with Baghdad in
the face of a Sunni insurgency, as security forces fought the
rebels for control of the country's biggest oil refinery.
A senior U.S. intelligence official said that the insurgents
were "well positioned" to hold a broad swathe of territory
captured in northern and western Iraq unless the Baghdad
government can muster a counter-offensive.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell about 0.4 percent, while Japan's Nikkei
stock average ended 0.7 percent lower.
In volatile U.S. trading on Tuesday, the S&P 500
closed down more than half a percent in its sharpest loss since
June 12, after earlier setting a fourth record high in five
sessions following upbeat U.S. economic data.
Sales of new homes surged 18.6 percent to a seasonally
adjusted annual rate of 504,000 units in May, the highest since
May 2008 and the biggest increase since January 1992. Separate
data from the Conference Board showed its index of consumer
attitudes rose to 85.2 in June from a downwardly revised 82.2 in
But U.S. Treasury prices shrugged off the brighter data and
yields fell, with the benchmark 10-year rate
dropping to 2.580 percent in Asia from its U.S. close of 2.586
A trio of Fed officials gave investors no reason to believe
the central bank's stance had changed. William Dudley, president
of the New York Fed, said the U.S. central bank can wait to
raise interest rates until mid-2015 without risking an
undesirable rise in inflation.
San Francisco Fed President John Williams said on Tuesday
that the U.S. economy is about two years from being "normal,"
while Philadelphia Federal Reserve Bank President Charles
Plosser said the economy continues to improve, making steady
rather than exuberant progress.
With no help from U.S. Treasury yields, the dollar edged
down about 0.1 percent to buy 101.89 yen, while the euro
also inched lower to 138.71 yen.
"Overall, the yen looks better bid unless the Bank of Japan
comes up with its next easing plan," said Bart Wakabayashi, head
of forex at State Street in Tokyo.
Despite the BOJ's confidence that it will meet its inflation
target next year without further stimulus, most economists still
believe it will need to ease policy again by December, according
to a Reuters poll published on Wednesday.
Japanese Prime Minister Shinzo Abe unveiled a package of
measures on Tuesday aimed at boosting Japan's long-term economic
growth, though market impact was muted.
Against the greenback, the euro was slightly higher on the
day at $1.3613.
The dollar index also consolidated at 80.293, solidly
within the 80.000-81.000 range in which it has been stuck since
Crude oil markets were mixed as traders weighed the
likelihood of supply disruptions from Iraq.
U.S. prices rose on a Wall Street Journal report that the
government has allowed two companies to export ultra-light oil
known as condensate, a first step that effectively loosens a
40-year ban on most U.S. crude exports.
U.S. crude for August delivery advanced about 0.6
percent to $106.69 a barrel, after spiking as high as $107.50
early in the session.
Brent crude for August fell about 0.2 percent to
"Oil prices have been unusually stable in recent years, but
events in Iraq are causing a reassessment of medium-term oil
market fundamentals that we expect to translate into a phase of
higher long-term prices and more volatile trading conditions,"
strategists at Barclays said in a note to clients.
"Geopolitical risks have replaced China's growth and Fed
policy as the main concerns for investors," they said.
Spot gold slipped about 0.4 percent to $1,312.40 an
ounce, after spiking to a more than two-month high of $1,325.90
(Additional reporting by Shinichi Saoshiro; Editing by Shri
Navaratnam & Kim Coghill)