Asian shares skid to three-week lows

By Hideyuki Sano

TOKYO (Reuters) - Asian shares slumped to a three-week low on Friday after Wall Street suffered its biggest fall in more than two months, while a surprise interest rate cut by the European Central Bank underscored the fragility of the global economy.

The euro was under the cosh after slipping to seven-week lows of $1.3295 on Thursday after the ECB cut borrowing costs to a record low of 0.25 percent in response to a sharp drop in inflation.

The euro was last changing hands at $1.3415.

Markets in Asia took their cues from a rough night on Wall Street as weak earnings saw the Dow Jones industrial average slide 0.97 percent and the Standard & Poor's 500 Index tumble 1.32 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent to a three-week low.

Stocks in Japan were hit hard with the Nikkei down 1.3 percent to a one-month low and South Korean shares off 0.9 percent to a four-week trough.

Muddying the global growth picture, the U.S. third-quarter GDP report suggested the world's biggest economy was not out of the woods yet.

Data showed U.S. growth accelerated to 2.8 percent in July-September, well above economists forecast of 2.0 percent growth. However, the headline number was deceptive as consumer spending growth was slowest in two years and inventory gains accounted for much of the gains.

The dollar managed to strengthen on the U.S. data, as investors bet the Federal Reserve may be able to cut back its stimulus spending later this year.

The dollar's index against a basket of major currencies hit an eight-week high of 81.46 and last stood at 80.84.

The dollar's strength suppressed oil prices, with Brent crude hitting a four-month low of $103.24 a barrel. Plentiful crude supplies and progress in talks over Iran's disputed nuclear program also weighed on oil.

(Editing by Shri Navaratnam)