* MSCI Asia ex-Japan drops as more data awaited
* Nikkei tumbles 2.6 pct as yen extends gains vs dollar,
* Gold firmer, platinum off 3-month highs
* European shares likely gain modestly
By Chikako Mogi
TOKYO, Jan 16 (Reuters) - Asian shares fell on Wednesday as
cautious investors waited for crucial economic data from China
later this week, while the yen's extended gains spurred profit
taking in Japanese equities after their recent rally.
Japan's benchmark Nikkei average shed 2.6 percent
for its largest daily decline in eight months, sharply reversing
Tuesday's rally that lifted the index to a 32-month closing
high, as the yen paused from its recent heavy selling and
extended gains for two days in a row.
The weak yen has been a catalyst for the Nikkei's 24 percent
gain over the past two months.
"It's a correction. Some exporters' gains are legitimate,
but others aren't, so I am selling exporters which have gained
while their fundamentals are still poor such as Panasonic," said
Makoto Kikuchi, Chief Executive of Myojo Asset Management in
Many other markets which had rallied opted to trim long
positions ahead of a slew of reports due on Friday from China,
the world's second-largest economy and top consumer of most
The MSCI's broadest index of Asia-Pacific shares outside
Japan wiped out earlier modest gains to fall 0.4
percent, dragged lower by a 1.5 percent drop in the index's
worst performer, Shanghai shares. Hong Kong shares
shed 0.6 percent.
Bucking the risk-off trend, Australian shares and Brent
futures gained, encouraged by Tuesday's stronger-than-expected
U.S. retail sales data in December.
European markets are seen rising modestly, with financial
spread-betters predicting London's FTSE 100, Paris's
CAC-40 and Frankfurt's DAX would open up as
much as 0.3 percent. A 0.2 percent fall in U.S. stock futures
hinted at a weak start on Wall Street.
Data showing China's foreign direct investment inflows
falling by a smaller percentage in December than the month
before helped trim losses in Chinese stocks, ahead of
fourth-quarter GDP and December industrial output, retail sales
and house price data expected on Friday.
The data from China will be keenly watched by investors for
clues on the health of the Asia's biggest economy and global
Being Asia's sole outperformer, Australian shares
advanced 0.5 percent, led by banks and defensives after Wall
Street posted modest gains on the retail sales data.
"It would appear that a number of traders are waiting to see
how Friday's Chinese GDP data pans out before buying with more
conviction and this is particularly true of the mining sector,"
said Tim Waterer, senior trader at CMC Markets in Sydney.
Selling in the dollar and the euro against the yen in what
traders say is a short-term corrective move was sparked by a
Japanese official on Tuesday warning of damage from excessive
yen weakness through rising import prices.
The yen had steadily fallen over the past two months on
expectations the new government would embark on aggressive
fiscal stimulus while pushing the Bank of Japan to take bold
monetary easing steps.
Data on Wednesday showed Japan's core machinery orders rose
3.9 percent in November from October, exceeding a forecast 0.3
percent rise, but another report showed consumer confidence
worsened in December.
The dollar fell 0.7 percent to 88.13 yen, after
scaling its peak since June 2010 of 89.67 on Monday.
The euro slumped 0.9 percent to 117.09 yen, after
surging to its highest since May 2011 of 120.13 yen on Monday.
The euro eased 0.2 percent against the dollar to $1.3281
, after reaching an 11-month high of $1.3404 on Monday.
The euro was pressured by a weak economic report from
Germany as well as comments from the chairman of the euro zone
finance ministers, Jean-Claude Juncker, who on Tuesday said the
euro was "dangerously high" without elaborating.
The single currency eased 0.1 percent against the Swiss
franc at 1.2385, off Tuesday's 13-month high of 1.2413
francs. The Swiss franc has been hit by receding safe-haven bids
as falling yields in deeply indebted countries such as Spain and
Italy eased concerns about the euro zone's debt crisis.
Reversals in the strengthening trend for the Swiss franc and
the yen may suggest asset reallocations are taking place.
"Old regimes are dying and FX is the first sign of this
process. We are seeing this in JPY, are starting to see this in
CHF," Sebastien Galy, strategist at Societe Generale, said in a
note to clients.
Spot gold rose 0.2 percent to $1,681.55 an ounce,
underpinned by wariness about U.S. default risks.
But platinum fell 0.7 percent to $1,666.75 an ounce
after hitting a three-month high of $1,699.50 on Tuesday on
supply fears. It traded at a premium to gold on Tuesday for the
first time since March 2012.
The benchmark gold futures contract on the Tokyo Commodity
Exchange hit a record high for a third consecutive
session, rising to 4,828 yen a gram.
U.S. crude was up 0.2 percent to $93.44 a barrel
while Brent was up 0.3 percent to $110.61.
A falling stock market weighed on Asian credit markets,
pushing the spread on the iTraxx Asia ex-Japan investment-grade
index wider by 2 basis points.