Asian shares dip on global growth concerns, U.S. selloff

By Nichola Saminather

SINGAPORE (Reuters) - Asian shares followed Wall Street lower on Monday after the Federal Reserve's decision to keep interest rates at record lows raised fresh concerns about growth globally, particularly in China.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, with Australia down 2.3 percent and South Korea off 1.4 percent. Japan was closed for a long holiday.

U.S. shares dropped more than 1.3 percent on Friday, after Fed Chair Janet Yellen said on Thursday that the global economic outlook appeared less certain.

"The monetary-policy-watcher world has now turned decidedly bearish after last Friday's Fed meeting," Evan Lucas, market strategist at trading services provider IG in Melbourne, wrote in a note.

"If emerging market risk, coupled with low-growth European environment is affecting Fed decision making, sentiment uncertainty will amplify," he said.

Investors will be focusing on flash business readings from China and the eurozone on Wednesday.

A Reuters poll showed economists expect the flash August China factory PMI headline reading to edge up to 47.5 from 47.1 in August, but it likely remained near 6/1-2-year lows and pointed to a seventh straight contraction in activity on a monthly basis.

U.S. and European debt yields also tumbled, with the policy-sensitive two-year yield falling to 0.678 after hitting a four-and-a-half year high of 0.819 percent earlier in the week.

Yields on the U.S. 10-year note slid to 2.123 percent, and the 10-year German Bund yield fell 12 basis points to 66 basis points, its biggest one-day drop since early July.

The U.S. dollar, which retreated after the Fed decision, has since recovered, with the dollar index rising 0.4 percent to 95.214 on Monday.

It held steady against the yen at 119.93.

The euro was little changed at $1.1298.

Oil prices were slightly higher in early Asian trade, after slumping on Friday on the selloff in U.S. stocks.

U.S. crude futures were up 0.5 percent at $44.92. Brent futures also rose 0.3 percent to $47.61.

(Reporting By Nichola Saminather; Editing by Kim Coghill)