Asian shares slip as bank fears add to global gloom

Reuters: Asian shares slipped on Friday as mounting concerns about the health of European banks further threatened a global economic outlook already under strain from falling oil prices and slowdown in China and other emerging markets.

The prices of yen, gold and liquid government bonds of favoured countries soared as investors rushed to traditional safe-haven assets.

MSCI’s index of Asia-Pacific shares outside Japan fell 0.5%. Japan’s Nikkei fell 5.3% to a 15-month low as sudden spike in the yen took most investors by surprise.

Financial shares led losses in Australia and Hong Kong though their declines are still modest compared to peers in Europe and the US.

The strengthening yen touched 110.985 to the dollar on Thursday, rising almost 10% from its six-week low touched on Jan 29, when the Bank of Japan introduced negative interest rates.

The currency last stood at 112.22 yen, hardly showing any reaction after Japanese Finance Minister Taro Aso stepped up his verbal intervention on Friday, saying he would take appropriate action as needed.

MSCI’s broadest gauge of stock markets fell 0.6% in Asia on Friday, flirting with its lowest level since June 2013.

It has fallen fell more than 20% below its record high last May, confirming global stocks are in a bear market.

On Wall street, the U.S. benchmark S&P 500 fell 1.23% to 1,829.08, its lowest close in almost two years and down 10.5% for the year.

The FTSEurofirst 300 index of top European shares sank 3.7% to its lowest level in 2-1/2 years.

The 10-year U.S. Treasuries yield fell to as low as 1.530%, a low last seen in August 2012, which is just before the Fed started its third round of quantitative easing. It stood at 1.657% in early Asian trade.

Federal funds rate futures almost completely priced out the chance of a rate hike.

Gold surged to one-year high of $1,262.90 per ounce on Thursday, rising over four% in its biggest daily%age gain since September 2013. It last stood at $1,237.5.

U.S. crude futures last traded at $27.44, up 4.7% from late U.S. levels, helped by comments from an OPEC energy minister sparking hopes of a coordinated production cut.

International benchmark Brent futures rose 4.3% to $31.35.