RPT-GLOBAL MARKETS-Grim earnings outlook hits stocks; dollar up
* U.S. earnings shortfalls bode ill for Asia's corporates
* Dollar hits 20-month high vs euro; sterling at 5-year low
* Asia facing in inventory problem? (Repeats to more subscribers)
HONG KONG, Oct 22 (Reuters) - Asian stocks fell on Wednesday as poor U.S. corporate results and slumping commodity prices fanned worries of a protracted global economic slowdown.
The U.S. dollar rose to a 20-month high against the euro as investors bet that central banks around the world will have to catch up to this year's deep interest rate cuts by the Federal Reserve as their economies slow.
U.S. crude oil futures fell more than $2 a barrel to below $70 on worries that any output cuts by OPEC will not be enough to offset weakening energy demand in leading consuming countries.
In addition to problems created by tight credit markets, some Asian companies have been caught off guard by the pace at which global demand has dropped. As a result, rising inventories pose yet another drag on earnings prospects.
"As the credit crunch has worsened, wholesale business inventories have risen, causing an alarming rise in inventories in Asia and emerging markets at a time when seasonally these are usually being drawn down," said Sean Darby, chief Asia strategist with Nomura in Hong Kong.
"We would expect earnings to be further revised down within Asia and global emerging markets," he said in a note.
Japan's Nikkei share average .N225 fell 4.3 percent, erasing Tuesday's gains, as the strengthening yen hurt exporters' prospects.
Mitsubishi UFJ Financial Group's (8306.T) shares dropped 7.2 percent after the Nikkei business daily said Japan's top lender will sharply cut its net profit estimate for the half year ended Sept. 30, with the final figure expected to be half that of a year earlier.
The MSCI index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS declined 3.8 percent.
Hong Kong's Hang Seng index .HSI dropped 2.8 percent, with CITIC Pacific (0267.HK) one of the biggest decliners for a second day after warning of nearly $2 billion in potential losses resulting from unauthorised currency trading.
CITIC Pacific fell 10 percent in morning trade, after losing half of its market value on Tuesday.
The Securities and Futures Commission (SFC) confirmed that a formal investigation has been launched into the company. Continued...
