By Shinichi Saoshiro
TOKYO (Reuters) - Asian stocks slipped and the euro stood tall against the dollar early on Thursday after U.S. data overnight showed the economy grew much more slowly than expected in the first quarter.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> fell 0.5 percent. Japan's Nikkei <.N225> shed 1.6 percent and South Korean and Australian shares also suffered losses.
The U.S. economy grew just 0.2 percent in the first quarter, down sharply from the previous quarter's 2.2 percent growth. The disappointing data further dimmed already faint prospects for an interest rate hike in June by the Federal Reserve.
The euro was steady at $1.1118
The common currency shed some of its gains after investors focused on the Fed's monetary policy statement attributing the winter slowdown in U.S. economic growth partly to transitory factors.
The Fed, however, took a dimmer view of the labor market after its two-day policy meeting ended late Wednesday.
"All in all, the FOMC statement gave a balanced assessment of the current economic slowdown and the Committee remains very much in a data-dependent mode. However, the balanced and cautious tone in the statement is a far cry from the optimism and (over)confidence that we have seen in previous statements," economists at Rabobank wrote in a note to clients.
The dollar was down 0.1 percent at 118.945 yen after a choppy session overnight which took it between a low of 118.60 and a high of 119.36.
A rise in yields on U.S. Treasuries, which saw the benchmark 10-year note's yield climb to a six-week high overnight amid a global bond sell-off, helped shore up the dollar.
The Australian dollar was little changed at $0.8001 after marching to a three-month peak of $0.8077 overnight on the dollar's broad weakness.
Another factor aiding commodity currencies such as the Aussie was the recent surge in oil prices. U.S. crude was down 0.3 percent at $58.43 a barrel
(Editing by Eric Meijer)
