Asian shares skid as geopolitical tensions stoke growth worries

By Chuck Mikolajczak

NEW YORK (Reuters) - Asian shares were pressured on Friday as investors sought out safe-haven assets on growing fears that geopolitical tensions in Ukraine and the Middle East would sap global growth.

U.N. Secretary-General Ban Ki-moon and the United Nations Security Council on Thursday called for the international community to help Iraq's government and people as the country struggles against a sweeping advance by Islamist militants.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped about 0.2, while Japan's Nikkei stock average was down 1.2 percent.

Cautious investors awaited trade figures from China, expected at 0200 GMT.

"If export growth weakened last month, it would deal a strong blow to the Australian dollar and could drive the currency pair towards 92 cents," Kathy Lien, managing director of FX strategy for BK Asset Management, wrote in a note to clients.

The Australian dollar was slightly down on the day at $0.9261 after sliding to a low of $0.9259 on Thursday, its weakest level since early June, after data showed an unexpected jump in the domestic jobless rate.

Also in focus was the Reserve Bank of Australia's quarterly statement on monetary policy, due out at 0130 GMT.

Wall Street ended down on Thursday, erasing early gains marked on data showing the number of Americans filing new claims for unemployment benefits unexpectedly fell last week. [.N]

Risk averse-investors continued to seek the safety of fixed-income assets. The yield on 10-year Treasuries stood at 2.418 percent, down from the U.S. close of 2.424 percent and wallowing at its lowest levels since June 2013.

The yield on German Bunds slid to a record low of 1.069 percent, on heightened fears that Ukraine's conflict with pro-Russian rebels will crimp euro zone growth.

The European Central Bank said after its monthly policy-setting meeting on Thursday that it stands ready to take further easing steps to stave off deflation, and warned that the Ukraine crisis poses a serious risk.

Russia said on Wednesday it will ban all U.S. food imports and all European fruit and vegetables, in retaliation for Western sanctions imposed for Moscow's support of the Ukraine separatists.

A minor redeeming factor of the tensions was seen in a weaker euro, in line with the ECB's hopes. The European unit stood close to nine-month lows against the greenback at $1.3359, steady on the day and not far from this week's low of $1.3333 touched on Wednesday.

The dollar was steady on the day against the yen at 102.10, as investors awaited the outcome of the Bank of Japan's latest two-day policy meeting, at which the central bank is expected to maintain its massive asset purchases and its optimistic view on the economic outlook.

But after recent downbeat data, some policymakers might propose offering a bleaker view on exports and output than given in the July assessment.

Japan's current account swung to a deficit in June for the first time in five months, government data showed on Friday, due to a decline in earnings on overseas investments.

The bearish trading environment saw gold climbed back above $1,300 an ounce to stand at$1,310.80, after breaking through technical resistance overnight that could spur further gains

(Editing by Nick Zieminski and Meredith Mazzilli)