Shares pause after rally, eye US data for clues

TOKYO (Reuters): Asian shares drifted lower on Wednesday, after rallying the previous session on hopes for further stimulus from the Federal Reserve, as investors waited for more clues on the state of the U.S. economy.

 European equity markets were likely to follow weaker Asian peers, with financial spreadbetters predicting major European markets   to open down 0.2 to 0.3 percent. U.S. stock futures were steady. MSCI’s broadest index of Asia Pacific shares outside Japan fell 0.4 percent, after rising more than 1 percent to a one-week high on Tuesday. At current levels, the index is set for a quarterly gain of about 12 percent, the best showing since the third quarter of 2010.

 “It is natural to see a pause since equities markets have

been on an uptrend for five months since hitting their lows, but the downside is limited as real money, which has lagged hedge funds and CTAs (commodity trading advisors), is catching up with the rally,” said Tetsuro Ii, the president of Commons Asset Management in Tokyo.

 “Risk positive trend is likely to continue next quarter, while markets undergo a fine-tuning in sentiment, taking into consideration such risks as sluggish growth in China and the United States and rising oil prices.”

 Japan’s Nikkei share average fell 0.9 percent, giving up some of its gains from Tuesday - when it jumped 2.4 percent to its highest level since last year’s massive earthquake and tsunami on March 11 - as the majority of the companies in the index went ex-dividend.

 Dealers had expected the ex-dividend impact, with 195 out of 225 firms trading without the right of dividend, to take 86 points off the benchmark, or about 0.8 percent.

  Australian shares bucked the trend and rose 1 percent to a 4-1/2 month high as a report from the central bank said large banks were in a better position than a few years ago to cope with higher funding costs, boosting bank shares.

 Fed Chairman Ben Bernanke said on Tuesday it was too soon to declare victory in the U.S. economic recovery, warning against complacency in policymaking as the outlook brightens.

 After saying on Monday that accommodative monetary policy would stay in place to support demand, Bernanke told ABC news on Tuesday that the Fed has not taken any options off the table and needs to be prepared to respond to however the U.S. economy evolves.

 The Fed remains unlikely to abandon quantitative easing - creating money to fund asset purchases - outright, said Ashraf Laidi, chief global strategist at City Index Group, adding that this would be bullish for the euro against the dollar.

 The dollar eased 0.1 percent against the euro at $1.3331 and was down 0.4 percent against the yen at 82.90.

 

 US DURABLE GOODS EYED

 Expectations for a steady recovery in the U.S. economy have underpinned investor sentiment this year, offsetting the negative mood stirred by deteriorating euro zone growth.

 Investors will be looking for clues from U.S. durable goods orders data for February, due later in the day.

 “U.S. macro numbers seem to be topping out a bit,” said metals analyst Edward Meir at INTL FCStone. “If the next shoe is to drop, it will come from the macro numbers in the States really weakening and then the markets will take a hit,” he said.

 Data on Tuesday showed Americans were more worried about inflation in March than at any time in the last 10 months and consumer confidence waned in the wake of higher gasoline prices.

 But U.S. consumers’ views of their present situation rose to the highest level since September 2008 and another report hinted at a stabilising housing market.

 “Markets have arrived at a level where they probably need to see evidence of better economic growth and demand before they take things higher,” said Ric Spooner, Sydney-based chief market analyst at CMC Markets.

 Brent crude prices fell below $125 a barrel on the possibility of a release of strategic oil reserves by the U.S.  even after crude stockpiles in the world’s largest oil user rose more than expected last week. U.S. crude fell 0.5 percent at $106.74 a barrel.

 Copper slipped 0.6 percent to $8,477 a tonne, ahead of the U.S. data which would shed fresh insight into the health of the world’s top economy.

 Asian credit markets eased, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 4 basis points.