Asia: Shares slip with oil near 3-month low while yen, gold jump

[WELLINGTON] Commodity shares drove declines in Asia as crude oil traded near a three-month low and as a rebound in the yen sent Japanese equities down for a third day. Industrial metals rallied with gold.

The Asian stock benchmark swung back to losses as Japan's Topix index fell more than 1 per cent amid a second day of gains in the yen. Malaysia's ringgit slipped with US crude nearing US$43 a barrel on concern American producers are increasing drilling efforts despite already abundant supplies of the commodity.

Gold snapped a two-day decline with 10-year US Treasuries as investors count down to central bank meetings in the US and Japan later this week. Copper rose for the first time in three days and nickel jumped.

Driven to their highest point this year on expectations that central banks will continue to support their economies, global equities retreated on Monday as traders gravitated to the sidelines.

While the Fed will probably keep key borrowing costs on hold on Wednesday, economists predict the Bank of Japan will bolster stimulus two days later. Oil producers in the US continue to increase drilling, even as local crude inventories remain high.

While analysts predict data Wednesday may show a drop in American stockpiles, gasoline supplies - already at their highest level in decades - are projected to rise again.

"A stronger yen and cheaper oil prices are likely to damp investor sentiment," said Toshihiko Matsuno, a senior strategist with SMBC Friend Securities Co.

"Investors are likely to zone in on individual stocks as their respective earnings reports come out."

The MSCI Asia Pacific Index lost 0.3 per cent as of 9:25 am Tokyo time, with groups of energy producers and raw materials companies falling at least 0.7 per cent.

The Topix dropped 1.4 per cent, set for its steepest one-day decline since July 6, as the yen gained 0.6 per cent to 105.13 per dollar, extending last session's 0.3 per cent climb.

Australia's S&P/ASX 200 Index fell 0.4 per cent as the Kospi index in Seoul and New Zealand's S&P/NZX 50 Index traded little changed.

Futures on the S&P 500 slipped 0.1 per cent to 2,160.25 early Tuesday, after contracts on Hong Kong's Hang Seng and Hang Seng China Enterprises indexes retreated at least 0.6 per cent in most recent trade.

Both Hong Kong and the Philippines report on trade Tuesday, while Singaporean factory output data is also due.

BLOOMBERG