Global Markets - Mood sours as oil skids, China stocks slip

By Wayne Cole

SYDNEY (Reuters) - All the air was sucked out of Asian shares on Wednesday as oil prices took a fresh spill on news Kuwaiti oil workers ended a three-day strike, leaving markets suddenly directionless.

Oil again led the way by reversing much of Tuesday's sharp gains. Brent crude shed $1.12 to $42.91 a barrel, while U.S. crude oil sank $1.09 to $39.99.

"In the near term we are going to see more downward pressure than upward," said IHS analyst Victor Shum. [O/R]

China concerns also resurfaced as Shanghai stocks slid 3.8 percent, with every sector from financials to telecoms in the red.

Some cited comments from an influential central bank economist that future monetary policy would avoid encouraging companies to take on more debt and consider the impact of leverage on asset prices.

The deflating mood was reflected in a 0.3 percent drop in S&P 500 EMINI futures and gains for safe-haven U.S. bonds. European futures pointed to losses of between 0.4 to 0.6 percent for the FTSE 100, DAX and CAC 40.

The retreat dulled risk appetites and dragged MSCI's broadest index of Asia-Pacific shares outside Japan down 0.7 percent. It had started at its highest level since early November.

Japan's Nikkei clung to a 0.2 percent gain thanks to the recent pullback in the yen, but was running into profit taking above the 17,000 barrier.

LOOKING AHEAD TO ECB

On Wall Street the Dow Jones Industrial Index had ended Tuesday with gains of 0.27 percent, while the S&P 500 rose 0.31 percent to close above 2100 for the first time in 2016.

But the Nasdaq eased 0.4 percent and Intel shed 3 percent after hours as its results disappointed. The chipmaker lowered its revenue forecast and said on Tuesday it would cut 12,000 jobs globally.

Currencies were mixed with the U.S. dollar regaining some ground against commodity currencies such as the Australian dollar as oil fell away. Against a basket of currencies, it edged up 0.14 percent but was still not far from recent lows.

The U.S. dollar steadied on the yen at 108.87, while the euro idled at $1.1366.

Traders said much now depends on the outcome of the European Central Bank (ECB) policy meeting on Thursday.

In March, ECB chief Mario Draghi unleashed an aggressive package but muted its impact by suggesting there would be no further cuts, giving the euro an unwelcome boost.

"Outside of some verbal discomfort at the euro's strength and reiteration that the ECB stands ready to take further action if necessary, it is difficult to see what he can do," analysts at ANZ wrote in a note to clients.

"The risks of a further squeeze higher in EUR/USD are significant," they added.

(Reporting by Wayne Cole; Editing by Eric Meijer and Sam Holmes)