Asian shares fall on China, Intel while dollar remains steady

The dollar held on to modest overnight gains after Bernanke stuck to a timeline to wind down the Fed's $85 bn a month bond-buying programme

 

Asian shares fell on Thursday, as concerns over financing available to property developers weighed on Chinese markets, although overall sentiment was supported by Federal Reserve Chairman Ben Bernanke's pledge to keep monetary policy easy for the foreseeable future.

 

Regional tech-related stocks were hurt by US Intel Corp's dismal annual revenue forecast and capital spending cuts, citing softer personal computer sales and weakness in China, one of its biggest markets.

 

The dollar held on to modest overnight gains after Bernanke stuck to a timeline that he first outlined in June to wind down the Fed's $85 billion a month bond-buying programme, but he went out of his way to stress that nothing was set in stone.

 

China's CSI300 share index shed 1.1%, hitting a one-week low and lately forming a "death cross" - a bearish signal - with the 50-day moving average breaking below the 200-day moving average.

 

The pace of the monthly rise in China's home prices slowed slightly in June for a third straight month, though the year-on-year gains were the strongest this year, underlining challenges faced by Beijing in its fight to tame housing inflation.

 

"Fears are growing that the liquidity shock a few weeks ago may be starting to trickle into the sector," said Lee Wee Liat, BNP Paribas head of Asia property.

 

China's frothy property market is seen by analysts as one of the biggest financial risks to the world's second-largest economy, along with the run-up of debt by local governments and the explosive growth of the opaque "shadow banking" system.

 

While China's money market rates have since moderated the central bank allowed short-term borrowing costs to spike to record levels on June 20, sending a blunt message to overstretched lenders that it was determined to bring risky credit expansion under control.

 

Asian shares, as measured by the MSCI Asia-Pacific ex-Japan index, slipped 0.3%, reversing early rise to hover near a five-week high touched on Wednesday.

 

Seoul shares fell 0.6%, with index heavyweight Samsung Electronics Co Ltd  down 1.5% partly on the back of Intel's grim outlook, while Taipei's share index dropped 0.9%.

 

Underscoring worries over China's economic slowdown, Japanese manufacturers' mood worsened in July for the first time in eight months, a Reuters poll showed.

 

Tokyo's Nikkei gained 0.5%, however, helped by a 4.5% rise in SoftBank Corp <9984.T> after China's e-commerce Alibaba Group, of which the Japanese mobile operator owns about 30%, nearly tripled its net income in the first three months of the year.

 

DOLLAR STEADY

 

The dollar was steady against a basket of major currencies, holding on to overnight gains after Bernanke's remarks.

 

The US currency was up 0.2% at 99.790 yen, extending the previous session's 0.5% rise versus the yen, while the euro was steady at $1.3111.

 

"There is something in these comments for everybody," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "Bernanke has done a good job of leaving himself plenty of manoeuvre room in terms of policy."

 

Bernanke's remarks came as the Fed's Beige Book report of anecdotal information on business activity showed the US economy continued to grow at a modest to moderate pace in June and early July, but US housing data was disappointing.

 

In the commodity markets, gold stabilised after falling 1.3% on Wednesday, while copper prices gained 0.3% but remained below $7,000 a tonne after falling 1.5% in the previous session.

 

Brent crude prices dipped 0.1% to around $108.50 a barrel after gaining 0.6% on Wednesday after data from US Energy Information Administration showed a fall in American crude stocks.