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Thursday, 26 March 2015

Asia shares skid; oil climbs on Yemen escalation

A woman wearing a Hakama, or Japanese traditional Kimono, holds her mobile phone as she walks past an electronic board, showing the stock market indices of various countries, outside a brokerage in Tokyo, March 23, 2015. REUTERS/Yuya Shino

(Reuters) - Asian shares slipped on Thursday as tensions in the Middle East and losses on Wall Street soured sentiment, while the dollar's bull run looked to have stalled for the time being.

Risk appetite took a knock from news Saudi Arabia and its Gulf Arab allies had launched air strikes in Yemen against Houthi fighters who have tightened their grip on the southern city of Aden.

The potential threat to oil supplies from the Gulf was enough to lift U.S. crude CLc1 $2.26 to $51.47, while Brent crude LCOc1 surged $2.47 to $58.95 a barrel.

Safe haven U.S. Treasuries also rose, nudging 10-year yields down to 1.92 percent US10YT=RR, while gold touched a three-week top around $2,000 an ounce XAU=.

A dearth of Asian data meant the path of least resistance was for stocks to fall. The MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.6 percent.

Australia's main index .AXJO shed 0.9 percent, while the Nikkei .N225 lost 1.6 percent in its biggest daily decline since mid-January. Chinese markets, as so often, went their own way and Shanghai .SSEC rose 1.2 percent.

On Wall Street, a drop in technology stocks had knocked the Nasdaq IXIC. down 2.37 percent for its biggest decline in nearly a year. The Dow .DJI fell 1.62 percent, while the S&P 500 .SPX lost 1.46 percent.

Not helping was data showing spending on U.S. durable goods fell for a sixth straight month in February, fresh evidence that economic growth slowed sharply early in the year, due in part to bad weather.

That was just the latest in a run of soft U.S. indicators, a contrast to Europe where the news has been getting better.

JPMorgan noted that the gap between downward surprises on U.S. data and upward surprises on EU figures was at its widest since February last year when bad weather was also having a chilling effect on U.S. growth.

In currency markets, the dollar continued to consolidate after wild swings last week. Measured against a basket of currencies, the dollar eased 0.2 percent to 96.787 .DXY, just above a three-week trough of 96.387 set on Tuesday. Earlier this month, it scaled a 12-year peak of 100.390.

The euro EUR= was last at $1.0975, well off a 12-year trough of $1.0457 plumbed two weeks ago. Against the yen, the dollar softened to 119.32 JPY=, again just above a one-month trough of 119.22 set on Tuesday.

"While very tentative, the recent stability in the euro might suggest at least a near-term equilibrium has been reached," said CitiFX G10 strategist Josh O'Byrne.

"Though we still see EUR risks lower, we could be entering a period of consolidation," he said.

Reference: Wayne Cole

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