By Lisa Twaronite
TOKYO (Reuters) - Asian shares slumped on Friday, pulling back from a more than six-year high touched this week, after flaring Ukraine tensions spoiled investor risk appetite.
But spreadbetters predicted a steadier open ahead in Europe, suggesting the fears were receding. They expected Britain's
Wall Street sagged on Thursday as Ukraine's president said Russian troops had entered his country in support of pro-Moscow rebels who captured a key coastal town, escalating the five-month-old separatist conflict.
The United States on Thursday openly accused Russia of sending combat forces into Ukraine and threatened to tighten economic sanctions, but Washington stopped short of calling Moscow's latest step an invasion.
"While the primary driver of losses in global equities were developments on the Ukraine-Russia front, there were growing signs that the recent rally in equities was beginning to stall," IG strategist Stan Shamu said in a note.
"Perhaps yesterday?s news gave investors an excuse to take some profits off the table after a good run in equities," he added.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was down about 0.2 percent, pulling away from Thursday's high of 515.13, its highest since early 2008. It was on track for a weekly drop but still poised for a gain of around 0.3 percent in August.
Japan's Nikkei stock average <.N225> shed 0.2 percent after a spate of weak Japan data. It was also down for the week, bringing its monthly loss to about 1.3 percent.
On top of geopolitical concerns, bond yields worldwide have come under pressure this week on speculation that the European Central Bank would unveil new stimulus steps as soon as next week, to stave off deflation in the euro zone.
The yield on the 10-year German Bund
Sources told Reuters on Wednesday that the ECB is unlikely to take new policy action next week unless inflation figures due out later on Friday show the euro zone sinking significantly towards deflation.
German inflation for August released on Thursday came in at a steady 0.8 percent ahead of Friday's euro zone number, in line with forecasts but well shy of the ECB's target of close-to-but-just-under 2 percent for the euro zone.
The data pushed the euro back toward Wednesday's one-year low of $1.3152
The dollar edged up to 103.83 yen
Japanese household spending fell more than expected, the jobless rate edged up and factory output remained anemic in July after plunging last month, suggesting that soft exports and a sales tax hike in April may drag on the economy longer than expected.
"A rise in the jobless rate could undermine the BOJ's scenario that an improving job market boosts wages and inflation," said Minori Uchida, chief FX strategist at the Bank of Mitsubishi-Tokyo UFJ.
"The market appears not much interested in Japanese economy now but that may change towards the year-end as the government has to decide on whether or not it will go ahead with a tax hike planned next year," he added.
Spot gold
Brent crude
(Additional reporting by Hideyuki Sano; Editing by Eric Meijer & Shri Navaratnam)
