= Asian Shares Fall; US Earnings, Bernanke Comments Awaited

SINGAPORE, Jul 14, 2008 (Dow Jones Commodities News Select via Comtex) -- FNM | Quote | Chart | News | PowerRating -- Asian share markets are lower Tuesday with financial stocks declining on weakness in their U.S. counterparts, and technology stocks cautious before big U.S. companies report their earnings.

Markets remain jittery despite the recent moves by the U.S. Treasury and Federal Reserve to shore up confidence in mortgage giants Fannie Mae and Freddie Mac.

U.S. markets interpreted the GSE news overnight with a fair amount of caution, with Wall Street declining and bank stocks there remaining under pressure.

"That the two Depression-era institutions have slightly less risk of outright collapse does little to help bolster confidence in the stability of the U.S. financial system or suggest optimism in the U.S. economic outlook," said analysts at RBC Capital Markets.

"Sober second thought focused on the lingering risks in the system, most pressingly the strong possibility of more bank failures."

Investors are now awaiting Congressional testimony later Tuesday from Fed chief Ben Bernanke and Treasury Secretary Henry Paulson, on both monetary policy and the recent moves to bolster the GSEs.

Also, companies on the slate to report in the U.S. include tech bellwether Intel Corp., plus Charles Schwab Corp., Johnson & Johnson, U.S. Bancorp and Seagate Tech Inc.

In Asia, the Nikkei 225 was recently down 1.4% at 12,832.24.

Korea's Kospi Composite had fallen 2.4% to 1521.53, and "sentiment seems to be getting weaker even without new negative leads," said Park Suk-Hyun at Eugene Investment & Securities.

Bank shares were tepid with Kookmin Bank down 3.0% at KRW56,300 and Shinhan Financial 4.1% lower at KRW43,150. Tech stocks and exporters were also hit with Samsung Electronics falling 1.9% to KRW556,000 and LG Electronics down 3.6% at KRW108,500.

Taiwan's share index had fallen 3.0% to 6944.62 and under the key 7000 level, with the financial sector subindex down 5.2% and Cathay Financial Holding 6.5% lower to NT$59.00.

In Singapore, the Straits Times Index was down 1.0% at 2875.50. "What we want to look out for in time to come is for the market to trade higher or remain flat in the face of bad news. This would indicate that selling has run its course and a reversal might be in the pipeline," said analysts at Phillip Securities.

Australia's S&P/ASX 200 had fallen 1.7% to 4838.00 while New Zealand shares were at their lowest level since early in June 2005, down 1.1% at 3045.707.

Hong Kong's Hang Seng Index had declined 2.8% to at 21,394.51. HSBC was a leading decliner, down 2.1% to HK$114.10 on uncertainty over the U.S. economic outlook; the stock topped the short-selling list Monday.

In currency markets, the U.S. dollar was weakening further against its major counterparts, at Y105.91 against the Japanese yen, versus Y106.13 late in New York. The euro was around $1.5921 compared to $1.5910.

For currency traders, the main event remained Bernanke's testimony later, including what, if anything, he said about the inflation outlook.

"We expect he (Bernanke) will strike a fairly similar tone to that of the June 25 FOMC statement," said analysts at UBS.

"Our U.S. economists continue to call for two rate cuts by year-end, and the latest developments are supportive of their views."

Government bonds were mostly higher, while credit default swap spreads had widened.

In South Korea, the yield on the 3-year note was down three basis points at 6.14%. Lead Japanese Government Bond futures meanwhile were 0.37 higher at 136.44, after touching a 136.60 high, with the Bank of Japan widely expected to keep interest rates on hold at its meeting which wraps up Tuesday.

August Nymex crude oil was 34 cents lower at $144.84 a barrel after a modest rise in New York. News that Brazilian oil output curtailed due to a labor strike had been mostly returned was weighing on prices a little.

Spot gold was down $1.90 at $970.20 a troy ounce after hitting a four-month high in New York, with a close watch also on Bernanke's commentary later.

-By Rosalind Mathieson, Dow Jones Newswires; +65-6415-4140; rosalind.mathieson@dowjones.com

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(END) Dow Jones Newswires

07-14-08 2222ET

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