Asian shares slip, dollar near highs; Hong Kong unrest eyed

TOKYO (Reuters) - Asian shares got off on the back foot on Wednesday as continued civil unrest in Hong Kong sapped confidence, while the dollar index was in sight of a four-year high after marking its best quarterly gain in six years.

Trading in Asia was expected to be more subdued than usual, with China closed for National Day and investors warily monitoring developments in Hong Kong's pro-democracy unrest, as thousands of protesters stepped up pressure on the city's pro-Beijing government.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was down 0.4 percent, while Japan's Nikkei stock average <.N225> fell 0.2 percent. Japan's benchmark rose 4.9 percent in September, the biggest monthly rise since last November.

The Bank of Japan's closely watched tankan survey of business sentiment released before the market opened showed big manufacturers' confidence improved slightly in the latest quarter, but service-sector sentiment worsened, adding to evidence that a sales tax hike continues to weigh on the economy.

The dollar index <.DXY>, which tracks the greenback against a basket of rival currencies, touched a four-year high of 86.218, and last stood at 85.939.

The euro skidded as low as $1.2571 on Tuesday after data showed cooling euro zone inflation, the culmination of a dismal month in which the currency slipped 3.82 percent - its biggest decline in over two years. It was last steady on the day at $1.2629.

"The EUR/USD gapped lower by a big figure, falling toward 1.2570, before finding support and partially rebounding to 1.2630 this morning," said David de Garis, senior economist at National Australia Bank.

Data on Tuesday showed annual inflation cooled to 0.3 percent last month, well below the European Central Bank's target of just under 2 percent, increasing speculation the bank will take more easing steps.

The dollar added about 0.1 percent against the yen to 109.67 , after rising to a six-year high of 109.86 yen on Tuesday.

Oil crawled off overnight lows but remained pressured by the dollar's momentum. World oil prices tumbled to their lowest in more than two years, with U.S. crude posting its biggest daily decline since 2012.

Brent crude added about 0.2 percent on the day to $94.82 a barrel, after marking a 16 percent loss for the quarter, the biggest in two years. U.S. crude added about 0.2 percent to $91.34 a barrel after shedding 12 percent for the quarter, also its biggest quarterly loss in two years.

(Additional reporting by Ian Chua in Sydney; Editing by Shri Navaratnam)

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