Asia slips as weak oil feeds growth worries, euro bullish

Asian stocks slipped on Thursday as weak oil prices continued to feed global growth worries, while the euro held solid gains after a policymaker poured cold water on market expectations of more easing by the European Central Bank. MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.2 percent. Japan's Nikkei fell 1 percent to hit a 1-month low and Australian shares dropped 0.8 percent. 

South Korea's Kospi dipped 0.2 percent. Risk asset markets continued to take cues from crude oil, which cooled investor sentiment by resuming its decline on a build in stocks of distillates such as fuel oil and diesel. Brent crude LCOc1 fetched $40.33 a barrel, within reach of a 7-year low of $39.57 struck on Wednesday. In currencies, the euro fetched $1.1021 EUR= after climbing a to one-month peak of $1.1044. 

The common currency, already on a bullish footing after the ECB's monetary easing last week fell well short of expectations, received a further boost after Governing Council member Ewald Nowotny suggested on Wednesday the markets were expecting too much stimulus from the central bank. A notable mover in Asia was the New Zealand dollar, which soared after the Reserve Bank of New Zealand (RBNZ) early on Thursday cut interest rates but said further easing should not be needed. The kiwi traded at $0.6722 NZD=D4 after gaining more than one percent in response to the central bank's statement. "Price action following the RBNZ announcement suggests that the bigger surprise was the watering down of the forward guidance and focus on upside risks as opposed to the rate cut," wrote Todd Elmer, Citi's Asian head of G10 FX strategy. 

"The RBNZ shifted its guidance to say, 'We expect to achieve this (inflation) at current interest rate settings, although the Bank will reduce rates if circumstances warrant' marking a moderation in the easing bias." The dollar fetched 121.59 yen JPY= after tumbling overnight to a 1-month low of 121.07 yen as the Japanese currency attracted safe haven bids amid on ongoing rout in commodities. 

With the greenback on the back foot against the euro and yen, the dollar index .DXY hovered near a 1-month low of 97.223 struck overnight. The U.S. currency was hurt as Treasury yields fell on a flight to safety to government debt, prompted by falling oil prices and a decline on Wall Street. The S&P 500 tracked weaker commodities and lost 0.8 percent on Wednesday, while the Dow lost 0.4 percent and the Nasdaq shed 1.5 percent. Highlighting the plight of the broader commodity markets, the Thomson Reuters Core Commodity CRB index hit a fresh 13-year low on Wednesday.

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