Asian shares hit by earnings woes

By Rafael Nam

HONG KONG (Reuters) - Fears of steep losses at corporate bellwethers from Citigroup to Sony hit Asian shares on Tuesday, signalling the extent of the global economic slowdown and bolstering less risky assets such as government debt.

The euro extended its slide to near a one-month low against the dollar as the European Central Bank looks set to cut interest rates this week in response to slowing growth, while oil prices continued to fall after slumping nearly 8 percent on Monday on fears that recessions in some countries will slash energy demand.

Still, losses in Asian shares were not as steep as in previous days, while the Export-Import Bank of Korea sold $2 billion in five-year dollar bonds, indicating demand for new issuance in regional credit markets, albeit at a premium.

"Earnings and economic disappointments are the main contributors to the rise in risk aversion both of which are likely to act as a persistent drag on markets over coming weeks," Calyon analysts said in a note to clients on Tuesday.

The MSCI index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS fell 0.4 percent as of 0230 GMT, marking its fifth consecutive losing session.

After starting the year with gains, the MSCI indicator is now down more than 3 percent so far in 2009.

Concerns over big quarterly losses kept investors on edge. Citigroup (C.N) could record a fourth-quarter operating loss of over $10 billion, the Wall Street Journal reported on Monday, while U.S. aluminium producer Alcoa (AA.N) announced a fourth-quarter loss.

Asia's export companies are also hurting as major overseas markets such as the United States are mired in recession.