Asian shares, oil weaker after Fed's mixed message

Asian shares were on the back foot on Wednesday after Federal Reserve Chairman Ben Bernanke offered a gloomy view of the U.S. economy, but hopes that the central bank is moving closer to more stimulus measures limited the day's losses.

European shares were set for a firmer start, with Euro STOXX 50 futures opening up 0.6  per cent, while financial spreadbetters predicted a rise of as much as 0.3 per cent for Britain's FTSE 100. U.S. stocks futures were down 0.3 per cent.

Chinese shares underperformed the region, dragged down by property plays after data showing another year-on-year dip in home prices spurred profit-taking in one of this year's biggest outperformers in Asia.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.8 per cent. Hong Kong's Hang Seng index was down 1.5 per cent while property shares in Shanghai shed more than 5 per cent.

"With market confidence battered by one disappointing economic data after another, investors want more than just vague promises of action down the road," said Han Bum-ho, an analyst at Shinhan Investment & Securities.

The move in Asia followed a choppy session overnight on Wall Street, where the S&P 500 eked out a 0.7 per cent gain, partly driven by earnings from Goldman Sachs and Coca-Cola that came in ahead of expectations.

Japan's Nikkei closed down 0.3 per cent reversing earlier mild gains as worries about earnings from Japanese companies persisted.

In his testimony to the Senate Banking Committee, Bernanke said the economic recovery was being held back by anxiety over Europe's debt crisis and the path of U.S. fiscal policy, and he expressed unease over a stagnant jobs market.

Analysts said the Bernanke's comments on the economy, especially on the jobs market, suggested the central bank could opt for further monetary stimulus.

Bernanke's mixed message provided some support to the euro after a seesaw session overnight and the single currency was trading flat versus the dollar after pushing higher earlier in the day.

It was last at $1.2277, below Tuesday's one-week high of $1.2317 but well off a two-year low of $1.2162 hit last week.

Bernanke will complete his semiannual Congressional testimony by addressing the House Financial Services Committee later on Wednesday.

GROWTH SLOWING

Brent crude fell 0.7 per cent to below $104 a barrel, snapping five days of gains.

Top mining companies Rio Tinto and BHP Billiton were down 3.3 per cent and 2 per cent respectively after BHP followed its larger rival in setting out higher production forecasts amid risks of cooling demand from top customer China.

BHP said it expects to lift Australian iron ore output by 5 per cent in the 2013 financial year.

The Asian tech sector also was under pressure after top chipmaker Intel Corp reduced its growth forecast, reinforcing fears that a wavering global economy and a lack of consumer interest are dampening personal computer sales.

SK Hynix, the world's No.2 computer memory chip maker, declined 4.9 per cent.

In China markets, property stocks were clear laggards, with top developers Vanke down 5 per cent and Poly Real Estate down 6.5 per cent.

Home prices in China showed signs of stabilising in June, which could help the cooling economy, but there were few indications of Beijing easing its grip on the sector.

"The upcoming earnings for the sector will be bad, but investors will probably gloss over that," said Lee Wee Liat, head of property research at BNP Paribas.

"Policy will still be key, and they will be watching the guidance the companies provide, especially on their margins since there have been a lot of price cuts," said BNP's Lee.

Copyright @Thomson Reuters 2012