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Asia: Shares fall following oil slump; yen climbs, ringgit sinks

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[WELLINGTON] Oil's slump below US$45 a barrel weighed on Asian markets, with commodity stocks leading losses and Malaysia's ringgit sliding to a two-month low. The yen attempted a rebound as industrial metals meandered ahead of a swathe of global factory data.

South Korean and Australian equities led the charge lower, after losses in the US wiped out the S&P 500 Index's August gain. US crude tried to claw back some of its three-day slide, trading at US$44.84 a barrel as copper rose at least 0.1 per cent with zinc and nickel ahead of official and private gauges of Chinese manufacturing due Thursday.

The ringgit resumed declines, sliding for the third time this week while the yen snapped a six-day decline, rising from its weakest level in a month.

Oscillating sentiment over supply and demand has dominated oil trading the past month, with investors driving a recovery in mid-August amid prospects Opec members will agree to stabilise the market during talks this month.

Also hanging over traders is the outlook for US monetary policy, with the Federal Reserve indicating it may diverge further from other central banks by raising interest rates this year.

Payrolls data due Friday could provide clues as to whether that policy tightening will come sooner rather than later, with a private jobs report out Wednesday showing steady growth in the labour market.

"As markets move out of the holiday period into September, there is growing chatter that volatility may pick up in the short term, possibly led by a selloff in equities," David Croy, a senior rates strategist at ANZ Bank New Zealand Ltd in Wellington, said in a note to clients.

"For commodity markets and stocks, September's Opec meeting will be important given that Opec's August production is likely to have reached a high."

About 90 more stocks fell as rose on the MSCI Asia Pacific Index, which was little changed as of 9:18am Tokyo time. Japan's Topix index swung between gains and losses after rising to a six-week high last session.

Australia's S&P/ASX 200 Index dropped 0.2 per cent, while the Kospi index in Seoul declined 0.7 per cent. New Zealand's S&P/NZX 50 Indexlost 0.3 per cent after rising 0.7 per cent in August.

Futures on the S&P 500 Index were steady at 2,170, following a 0.2 per cent drop in the gauge that left it down 0.1 per cent last month. MSCI's All-Country World Index rose 0.1 per cent in August, led by gains in banks and technology shares.

In Hong Kong, Hang Seng Index futures retreated 0.4 per cent, while those on the Hang Seng China Enterprises Index - last month's best performing stock measure globally - slipped 0.5 per cent. FTSE China A50 Index contracts declined 0.1 per cent.

Indonesia and Thailand update on consumer prices Thursday, while Australia issues data on retail sales. Manufacturing purchasing managers' indexes are due for Indonesia, Malaysia, Taiwan, Vietnam, South Korea, Japan, Philippines, India, Thailand and Australia, as well as China.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, slipped 0.1 per cent early Thursday after capping a 0.6 per cent increase in August, its first monthly gain since May.

The yen strengthened 0.2 per cent to 103.22 per US dollar, following a six-day slide of more than 3 per cent.

Friday's payrolls data will be key for the greenback. US employers are projected to have added 180,000 jobs in August, according to economists surveyed by Bloomberg. While that would be down from a 255,000 increase in July, the monthly number has exceeded expectations in the past two readings. Odds of an increase in US rates next month climbed to 36 per cent Wednesday, from 18 per cent at the start of August, according to Fed fund futures tracked by Bloomberg. The chance of a hike by December was 60 per cent.

Fed Vice Chairman Stanley Fischer said last week a rate hike is possible and added Tuesday that the central bank would base decisions at its Sept 21 meeting on economic data, putting added focus on the US August payrolls report.

The US dollar's recent strength was due to "the Fischer comments made at the end of last week, which has spurred the belief that the September meeting could be very much alive," said Daragh Maher, New-York-based head of US currency strategy at HSBC Holdings Plc.

"The market took that as a validation to continue this mini-rally in the dollar." The ringgit weakened as much as 1 per cent to 4.0925 per US dollar, touching its lowest point since June 28.

Brazil's real extended what has become the world's best currency rally on Wednesday, gaining 0.4 per cent versus the US dollar as President Dilma Rousseff was impeached, fuelling optimism over an economy that is suffering its deepest recession in a century.

Senators found Ms Rousseff guilty of bypassing Congress to finance government spending. The decision means her vice president, Michel Temer, will likely serve out the term as leader until general elections in 2018.

The Brazilian central bank held benchmark rates at 14.25 per cent in a decision made public after the impeachment news.

BLOOMBERG