Asian shares extend fall

By Louise Heavens

SINGAPORE (Reuters) - Asian shares extended losses on Tuesday, after news of a possible capital injection at the largest U.S. savings and loan company failed to eliminate concerns about more bank writedowns and weakening company earnings.

Gold futures hovered near a one-week high as rising crude prices again stirred inflation fears, while Japanese government bond futures and Treasuries climbed.

The euro rose against the dollar and the yen as investors sought higher yielding assets in the face of steady euro zone rates and potentially lower interest rates in the United States.

European markets were set to open lower, with financial bookmakers in London predicting the FTSE 100 .FTSE index will open up to 0.6 percent lower, Germany's DAX .GDAXI 0.7 percent lower and France's CAC-40 .FCHI up to 0.9 percent lower.

Hopes that the global credit crisis may be easing were boosted on Wall Street by news that Washington Mutual Inc (WM.N) was close to securing a $5 billion (2.5 billion pound) investment.

But concerns that the U.S. recession, rising energy and raw material costs, and the credit crunch will hurt company earnings weighed on sentiment.

Banks and other financials were pressured by nagging worries about further writedowns. Australia and New Zealand Banking Group Ltd (ANZ.AX) fell in Sydney, and Mizuho Financial Group (8411.T) slipped in Tokyo.

"Their earnings risk is considerably higher than it used to be," said Eric Betts, equities strategist at Nomura Australia.