* Asian stocks drop for 4th session, rests on key technical
* Fed minutes on Wednesday could provide clues to policy
* Dollar supported as yields on U.S. Treasuries around
By Saikat Chatterjee
HONG KONG, Aug 20 (Reuters) - Many Asian stocks slid on
Tuesday, while yields on U.S. Treasuries held near two-year
highs as investors positioned for the probability that the U.S.
Federal Reserve will begin tapering stimulus as early as next
MSCI's broadest index of Asia-Pacific shares outside Japan
fell for the fourth consecutive session to
131.33 -- its lowest level since July 9.
European markets were also looking weaker. Eurostoxx 50
futures were down 0.5 percent, DAX futures were down 0.6
percent, and CAC 40 futures were 0.6 percent lower.
Japan's Nikkei led Asian stocks lower with the benchmark
index down 2.7 percent, reflecting the exposure of many
Japanese companies to India and Indonesia.
Indonesia and Indian shares had yet another torrid session
with stock markets down 4 and 1 percent respectively.
Punching through the 200-day moving average, the MSCI-ex
Japan broke a key technical support level, potentially
signalling further declines for the index.
The eventual withdrawal of cheap money by Western central
banks has been the dominant theme for Asia's financial markets
since late May, and emerging markets that have benefited from
the Fed's easy policy are now feeling the pinch.
The Indian rupee cratered to a record low of 63.30
per dollar on Monday, and Indonesia's rupiah and
Brazil's real both skidded to four-year lows.
The rupiah's pain was exacerbated by a 5 percent slide for
local stocks after they logged a 5.6 percent tumble on
Monday and traders said key support levels for currency could be
Analysts noted that the dollar's failure to rally broadly,
despite sharp plunges in high-yielding currencies, suggested the
market may already be positioning for a stimulus tapering.
The dollar was largely steady against a basket of major
currencies as 10-year U.S. Treasury yields marched
overnight to two-year highs, offsetting fears of the impact of
Fed stimulus reduction.
Emering market volatility was also spurring demand for the
yen, said Satoshi Okagawa, senior global markets analyst for
Sumitomo Mitsui Banking Corporation in Singapore. "The yen tends
to attract buying when tensions in the market increase," he
STOCK VALUATIONS AND COMMODITIES
Chinese shares have risen 7 percent so far this month, and
that bounce may have further to run especially with the release
of China's HSBC flash PMI for August due on Thursday, which
could confirm that the world's second-largest economy is picking
up from an early-year trough.
Chinese markets offer the best value on a 12-month forward
price-to-earnings ratio compared to a 10-year median, according
to Thomson Reuters data.
Bank of America Merrill Lynch analysts are overweight China,
Japan, Korea, and Taiwan, and underweight Indonesia, the
Philippines, Malaysia and Thailand, believing Asia-ex Japan
offers attractive opportunities despite bearish investor
positioning and interest.
In commodities, copper prices to $7,264.75 per
tonne, while gold eased to $1,361.66 per ounce, after
snapping a three-day winning streak on Monday and moving away
from a two-month high hit that session.
Brent crude prices fell 0.5 percent to $109.36 a
barrel, pressured by Fed fears but supported by the loss of
Libya's oil exports as well as concerns that continuing unrest
in Egypt could spread and interfere with supply.