TOKYO, Sept 4 (Reuters) - Asian shares eased on Tuesday on
concerns over weakening regional and global economic activity,
but expectations of more stimulus from central banks and hopes
for progress in tackling Europe's debt crisis lent support.
European equities were seen flat to lower, with financial
spreadbetters calling London's FTSE 100, Paris's CAC-40
and Frankfurt's DAX to open down as much as 0.2
U.S. stock futures were up 0.1 percent, pointing to a
somewhat firmer opening on Wall Street, which was closed on
Monday for the Labor Day holiday.
MSCI's broadest index of Asia-Pacific shares outside Japan
eased 0.2 percent and neared a four-week low
touched on Monday, pulled down by a 0.6 percent decline in
Hong Kong and Chinese shares fell as a slew of brokerages
started paring back expectations for returns.
Sluggish demand from China, the world's second-largest
economy and leading consumer of raw materials, has weighed on
Australian equities, with declining commodities prices, in
particular the recent plunge in iron ore prices to their lowest
since late 2009 , hitting mining shares.
Australia's third-ranked iron ore miner, Fortescue Metals
Group, on Tuesday slashed capital spending and cut its
expansion schedule for iron ore production.
"The recent sharp decline in commodity prices has caused
profits to deteriorate significantly, such that miners are now
spending more in capex than they are earning. This is not a
sustainable situation," said Credit Suisse analyst Atul Lele.
The Reserve Bank of Australia kept rates steady at 3.5
percent as expected on Tuesday, though it did concede the
outlook for China was becoming more uncertain.
The Australian dollar recovered to $1.0264 from
around $1.0231 before the RBA decision. Earlier in the day,
concerns about slowdowns at home and in China, its largest
export market, pushed the growth-sensitive currency to a
six-week low of $1.0224 against the U.S. dollar and
kept it near a nine-week low against the euro.
Investors were awaiting U.S. Institute for Supply Management
manufacturing data later in the day, after similar business
surveys on Monday underscored a spreading contraction in
manufacturing around the world in August as the euro zone's
troubles took a deeper toll on their economies.
The ISM, along with Friday's nonfarm payrolls, is key to
gauging the probability of further easing by the Federal Reserve
at its Sept. 12-13 policy meeting.
"The ECB meeting this week is important, but the U.S. ISM
index will also be key, because if these numbers are bad there
is a chance things will turn worse," said Chung Seung-jae, an
analyst at Mirae Asset Securities in Seoul.
Japan's Nikkei stock average fell 0.2 percent, after
touching a fresh four-week low.
ECB PRICED IN
The euro rose 0.2 percent to $1.2619, within reach of
an eight-week peak of $1.2638 set on Friday.
European Central Bank President Mario Draghi told European
lawmakers on Monday that the ECB's purchases of short-term
sovereign bonds would not breach the European Union's taboo of
directly financing euro zone economies.
Markets were already pricing in the ECB on Thursday to at
least outline its bond-buying scheme aimed at containing the
borrowing cost in struggling economies such as Spain. Such
prospects have helped cap Spanish 10-year yields below a
critical level of 7 percent.
A prolonged contraction in the euro zone manufacturing index
raised expectations the ECB may cut its main interest rates,
"While the white swan from the ECB's announcement of a new
bond buying programme was welcome, we remain concerned that new
white swans will be slower in coming," Societe Generale said in
a research note.
"This is nonetheless what defines the main upside. In China
and the U.S., the upside is defined by more policy stimulus. Our
fear is that such initially white swans, medium-term would turn
to black," it said.
Separately, German Finance Minister Wolfgang Schaeuble said
on Monday he was sure the country's Constitutional Court at its
Sept. 12 ruling would not block treaties establishing a
permanent bailout fund, the European Stability Mechanism (ESM),
and strong budgetary regulations in Europe.
The ESM, meant to succeed the existing temporary European
Financial Stability Facility, will provide a crucial firewall to
contain the euro zone debt crisis and the ECB's bond-buying plan
is conditional on its deployment.
Precious metals rose on speculation for additional monetary
policy, lifting spot gold to its highest since mid-March
of $1,696.91 an ounce. The most active U.S. silver futures
contract rose nearly 3 percent to $32.38 per ounce, the
highest since mid-April, while spot silver stayed near a
4-1/2 month high of $32.31 hit on Monday.
U.S. crude rose 0.8 percent to $97.25 a barrel while
Brent inched up 0.3 percent to $116.07.
Asian credit markets firmed, tightening the spread on the
iTraxx Asia ex-Japan investment-grade index by four