* MSCI Asia ex-Japan down 0.5 pct, Nikkei drops 0.5 pct
* Dollar vulnerable after weak data
* ECB rate decision eyed, markets expect 25 bps cut
By Chikako Mogi
TOKYO, May 2 (Reuters) - Growing doubts over the health of
global economies pushed Asian shares lower on Thursday, adding
to investor caution before the European Central Bank meeting
later in the day that could see interest rates cut to support
Investor sentiment has weakened as oil futures and U.S.
stocks dropped overnight after the latest U.S. economic data
cast doubts about the strength of the world's biggest economy.
The euro zone recession was behind mounting market
expectations for the ECB to lower its main interest rate by 25
basis points to a record low 0.5 percent, while sluggish U.S.
demand may be slowing China's economic recovery.
On Thursday, the final HSBC Purchasing Managers' Index
dropped to 50.4 in April from March's 51.6 and a tad below a
flash reading of 50.5, as new export orders fell for the first
time this year.
Concerns about slow demand from China, Australia's top
consumer and the world's second-largest, weighed on Australian
shares and its currency while also hitting Chinese shares and
"The trend in the Chinese economy continues to improve and
it has not lost momentum, but it is fragile and vulnerable to
outside shocks, namely the U.S. economy which is showing signs
of pausing," said Hirokazu Yuihama, a senior strategist at Daiwa
Securities in Tokyo.
"Market tone is dictated by the tug-of-war between growth
prospect worries and support from sustained monetary stimulus.
Weaker U.S. growth may prompt profit taking in Asian equities
which have outperformed earlier this year, keeping regional
markets in ranges," Yuihama said.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.5 percent, with Australian shares
leading the decline as miners dragged the key index down 0.8
"What we're seeing today is the material stocks lagging,
pulling the market down, there's still no real conviction in the
major mining stocks despite them being at pretty depressed
levels," said Peter Esho, investment adviser at Wilson HTM
Investment Group, of Australian shares.
Shanghai shares were down 0.3 percent after earlier
touching 2013 lows while a sharp slide for CNOOC made
the Chinese oil major the largest drag on Hong Kong's Hang Seng
Index which eased 0.4 percent. Shanghai copper
fell nearly 5 percent to a session low of 49,240 yuan per tonne.
Japan's Nikkei stock average slipped 0.5 percent,
heading for a fourth straight session of losses, which would
mark the longest such losing run since November, just before
Prime Minister Shinzo Abe starting making election-campaign
promises of expansionary monetary and fiscal policies to spur
Japanese financial markets will be closed on Friday and
Monday for public holidays.
FED KEEPS OPTIONS OPEN
The dollar recovered from lows against a basket of six major
currencies but stayed near its lowest since late February
at 81.331 hit on Wednesday, after the U.S. Federal Reserve kept
its plan to buy $85 billion in bonds each month, as was widely
The dollar's weakness lifted the euro to a two-month high of
$1.3243 on Wednesday, and the common currency was steady
around $1.3178 this session.
"Poor growth prospects remain a major deterrent to credit
demand in the euro zone. The lack of credit demand points to
further contraction in the region. This poor prognosis along
with the disappointing read on Germany's PMI in April should see
the ECB ease policy," Barclays Capital said in a research note.
The dollar fell 0.1 percent against the yen to 97.30,
pressured by emerging signs of weakness continuing in the
A private ADP report on employment on Wednesday showed
119,000 jobs were created in April, far fewer than the 150,000
forecast, prompting apprehension over the key government nonfarm
payrolls data for April due on Friday. The U.S. economy likely
added 145,000 jobs. March fell severely short of expectations at
88,000 -- triggering a sell-off in riskier assets.
Also on Wednesday, a private U.S. factory activity gauge
fell in March, with its employment index also declining.
"The feeling that the economy was subject to downside risks
remained a feature, while the Fed hinted that it could alter the
amount of its bond purchases in either direction in response to
incoming data," Andrew Wilkinson, chief economic strategist at
Miller Tabak & Co in New York, said in a note to clients.
The Fed gave few indications of any new response to
worsening economic data in a statement released after its
two-day meeting ended on Wednesday. The U.S. central bank cited
risks to growth from recent budget tightening in Washington and
reiterated that unemployment is still too high for policymakers'
U.S. crude futures rose 0.2 percent to $91.17 a
barrel and Brent added 0.3 percent to $100.26.