Asian shares ease, euro near 6-week lows on Italian woes; gold jumps

By Swati Pandey

SYDNEY (Reuters) - Asian shares ticked down on Wednesday and the euro held at six-week lows as Italy's mounting debt and Rome's budget plan set it on a collision course with the European Union.

Japan's Nikkei <.N225> eased 0.5 percent on a stronger yen. Australian shares <.AXJO> gained 0.3 percent while New Zealand's benchmark index <.NZ50> fell 0.2 percent. E-Minis for the S&P 500 were a shade softer as were Dow futures <1YMc1>.

Investors remained jittery even as a new U.S.-Mexico-Canada trade agreement appeared to ease global trade tensions. A controversial clause in the trilateral pact put the focus back on the Sino-U.S. tariff dispute.

 

China's financial markets are closed for the National Day holiday and will resume trade on Oct. 8. The markets in the world's second biggest economy have taken a hammering this year as investors fretted the trade dispute could put a significant dent on growth.

That left MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> a shade weaker at 515.9 points.

Overnight, two of Wall Street's three main indices closed lower with the S&P 500 off a touch and the Nasdaq <.IXIC> down 0.5 percent. The Dow <.DJI> gained 0.5 percent to close at a fresh record high. [.N]

Globally, risk appetite was hit after European Union officials expressed concerns about Italy's budget plan, which would widen the deficit significantly. The deficit blowout revived fears of the eurozone debt crisis and put pressure on the euro.

"Budget details are still unavailable but the real anxiety surrounds the medium-term path of spending and debt. There is no evidence to suggest the sell-off has run its course," ANZ said in a note.

Italian 10-year bond yield soared to 4-1/2 year highs on Tuesday after a lawmaker said most of the country's problems would be solved by ditching the euro, but reassuring comments from the government bought calm to a jittery market.

The euro > ticked down to $1.1544 after falling for five days in a row to $1.1506, the lowest since Aug.21.

Sentiment was also hampered as investors turned their focus to the Sino-U.S. trade war.

"Many deadlines have come and gone and the trade war continues," said Ethan Harris, global economist, BankofAmerica-Merrill Lynch.

"However, in this case we have marked our calendar for November 30," the date when the U.S. President Donald Trump and his Mexican and Canadian counterparts are likely to sign the new trilateral trade pact.

"It is also the day Trump and Chinese President Xi Jinping are attending the G-20 meetings. (We) continue to believe that is the first plausible date for serious negotiations."

The dollar's index, which measures the greenback against a basket of major currencies <.DXY>, was last at 95.507, pulling back from six-week highs of 95.744 set on Tuesday.

Gold traded near its highest level in more than a week as investors sought refuge in the safe haven after equity markets weakened. Spot gold > was last at 1,206.48 after adding 1.3 percent to $1,208.23 an ounce overnight.

Oil prices held close to four-year highs on supply worries due to Washington's sanctions on Iran. [O

Brent eased 4 cents to $84.76 per barrel, not far from a four-year high of $85.45 touched earlier in the week. U.S. crude futures inched 9 cents lower to $75.14 a barrel, after earlier touching a four-year high of $75.91.

Some analysts say fears about the supply of oil may be overdone.

"Even assuming that Iranian output will fall by as much as it did during the far more comprehensive sanctions imposed between 2011 and 2014...we think that likely increases elsewhere will be enough to make up the difference," Capital Economics said in a note.

(Editing by Shri Navaratnam)