Asian shares slip, dollar pulls away from highs

TOKYO (Reuters) - Asian shares skidded on Monday as investors awaited data this week that could provide more evidence of a slowdown in China, while the dollar gave back a little of its recent gains.

China's flash manufacturing PMI reading on Tuesday could come in below the 50 level, indicating that manufacturing activity is contracting.

"The psychological effect of a below-50 reading will be significant and consistent with the slew of softer Chinese data over recent weeks." Mitul Kotecha, head of FX strategy Asia-Pacific for Barclays in Singapore, said in a note to clients.

China will not dramatically alter its economic policy because of any one economic indicator, Finance Minister Lou Jiwei said on Sunday, in remarks at a meeting of finance ministers and central bank chiefs from the Group of 20 nations who met in the Australian city of Cairns. His remarks came days after many economists lowered growth forecasts having seen the latest set of weak data.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> dropped 0.8 percent. Japan's Nikkei stock average <.N225> fell 0.7 percent, after it marked its highest closing level since 2007 on Friday, and gained 2.3 percent for the week.

Alibaba Group , in one of the biggest IPOs ever, ended up 38 percent at $93.89 on massive volume on Friday. Because the Chinese online retailer's stock is traded on the New York Stock Exchange and is not an S&P 500 component, its gains were not reflected in major indexes and it did little to help an otherwise lacklustre day on Wall Street.

The G20 leaders said they were close to adding an extra $2 trillion to the global economy and creating millions of new jobs, but Europe's extended stagnation remained a major stumbling block.

The dollar gave up 0.2 percent against a basket of major currencies to 84.600 <.DXY>, after the index posted its 10th consecutive week of gains on expectations that U.S. interest rates would rise more quickly than had been expected.

The Federal Reserve should start raising U.S. interest rates in the spring, earlier than many investors currently expect, and should do so both slowly and gradually, Dallas Federal Reserve Bank President Richard Fisher said in an interview on Fox Business Network on Friday.

But the outlook for U.S. monetary policy remains murky. The Fed issued a policy statement at the close of last week's two-day meeting that suggested the first rate hike wasn't due until around the middle of next year.

The greenback eased about 0.2 percent against its Japanese counterpart to 108.85 yen , moving away from a six-year high of 109.46 yen scaled on Friday.

The euro edged up 0.2 percent on the day to $1.2854, after earlier drifting down to touch a fresh 14-month low against the dollar of $1.2826.

Sterling added 0.4 percent to $1.6351 after it soared on Friday following Scotland's vote to reject independence.

Spot gold shed 0.2 percent to $1,212.56. Last week, gold posted a 1 percent drop for its third consecutive weekly fall.

Brent crude dropped 0.5 percent to $97.91 a barrel, while U.S. crude for October delivery , which expires later on Monday, fell about 0.3 percent to $92.13.

(Editing by Eric Meijer)

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