By Ian Chua
SYDNEY (Reuters) - Asian stocks slipped from seven-week highs on Thursday after Wall Street buckled under profit-taking pressure and as investors retreated to the sidelines with the earnings season heating up.
But a dearth of market-moving news saw the dollar struggle to extend gains after snapping a three-day slide, while gold found a tentative footing following a 2 percent fall.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3 percent, having posted a seven-week closing high just a day earlier. Tokyo's Nikkei closed 1.1 percent lower at 14,562.9, continuing to find resistance ahead of the 15,000 mark.
Financial bookmakers expect a subdued start for European stocks, although traders are hopeful that economic data will provide a catalyst for more gains.
"A moderation in the Spanish unemployment rate and an increase in the German IFO Business Climate should keep the continent happy whilst closer to home the first reading for Q2 UK GDP is expected to confirm the bullish undercurrent," Jonathan Sudaria, a dealer at Capital Spreads in London wrote in a morning note.
Investors were also waiting on key company results and outlooks before deciding on whether to jump back in.
The earnings season has kicked off in earnest in major financial centres including Japan, Europe and the United States, keeping markets in check as investors gauge the business outlooks amid challenging global growth prospects, including a slowdown in China.
The decline in Asian bourses came after the U.S. S&P 500 index shed 0.4 percent, a modest move and yet still the biggest fall in almost a month.
Analysts said Wall Street was taking a breather as investors booked profits in a rally that has swept the index to a string of record highs.
DOLLAR STRUGGLES
Currency investors lacked the drive to do much in Asia with the dollar slipping 0.2 percent against a basket of major currencies <.DXY>, erasing some of the gains made on Wednesday.
The dollar had ended a three-day fall after U.S. data showed a further recovery in the housing market and an acceleration in factory activity, supporting the Federal Reserve's view that the economy will continue to recover gradually.
Treasury bond yields rose as a result, which in turn provided support for the greenback. But there was a clear lack of follow-through buying in Asia.
"We're still in summer, relatively thin markets so I wouldn't expect the bounce (in the dollar) to be dramatic from here," said Callum Henderson, global head of FX research for Standard Chartered Bank.
The dollar dipped back below 100 yen, off an early high of 100.45, while the euro edged up 0.1 percent to $1.3213, recovering a bit of ground lost on Wednesday.
Against the yen, the common currency gave back some of its overnight gains, easing to 132.09 from a two-month peak around 132.74.
Investors had warmed to the common currency after closely watched surveys showed unexpected growth in euro zone factories, with Markit's flash Eurozone Composite PMI jumping to an 18-month high of 50.4 in July.
Data later on Thursday is expected to show Britain's economy expanded at a faster pace in the second quarter, helped by growing confidence among consumers and by signs that companies are ready to borrow and spend more.
A standout currency was the New Zealand dollar, which made a strong comeback after the country's central bank surprised some by sounding slightly hawkish, even as it pledged to leave the overnight cash rate (OCR) unchanged at a record low 2.5 percent until year end.
"There was a clear tightening bias with acknowledgement that the removal of monetary policy stimulus will 'likely' be needed in the future," analysts at ANZ highlighted in a note.
"We're still picking early 2014. The precise date is somewhat secondary with the real issue being at what pace and regularity the OCR ends up being lifted. We're in the gradual camp."
The kiwi was last at $0.7995, well off a low of$0.7925 seen before the Reserve Bank of New Zealand rate decision.
Doing less well, most commodities were under pressure given ongoing worries about a slowdown in China.
Copper fell 0.4 percent to $7,023 a tonne, reversing all of Wednesday's 0.2 percent rise. U.S. crude slipped 0.4 percent to $105 a barrel, extending its pullback from a 16-month high of $109.32 set last Friday.
"We think that China is going to continue to be under a bit of pressure and that could weigh on the base metals market a bit more," said Natalie Rampono, commodity strategist at Australia and New Zealand Banking Group.
Spot gold, though, was steadier at $1,320 an ounce, following a 2.0 percent slide on Wednesday.
(Additional reporting by Masayuki Kitano and Manolo Serapio Jr in Singapore; Editing by Shri Navaratnam)
