Asian stocks fall after U.S. credit outlook cut

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By Sugita Katyal
SINGAPORE | Mon Apr 18, 2011 9:22pm EDT
(Reuters) - Asian markets fell on Tuesday after rating agency Standard & Poor's lowered its U.S. credit outlook to negative, prompting a global flight to other assets.

The euro nursed heavy losses early in Asia while the yen gained across the board as worries about sovereign debt problems in Europe and the United States prompted investors to unwind carry trades.

Spot gold prices firmed below their record high, as the S&P move and other developments further stoked investors' interest in bullion.

The S&P cut in outlook on United States debt jacks up pressure on the Obama administration and Congress to slash the yawning federal budget deficit.

S&P, which assigns ratings to guide investors on the risks involved in buying debt instruments, said the move signals at least a one-in-three chance that it could eventually cut its long-term AAA rating on the United States within two years.

Japan's benchmark Nikkei average .N225 was down 1.2 percent, or 113.89 points at 9,442.76, while the broader Topix .TOPX shed 1.0 percent to 827.88.

The euro fell to as low as 116.41 yen -- the lowest since March 30. The dollar also underperformed the yen, falling to a near three-week low around 82.16, before recovering slightly to last stand at 82.59.

Spot gold gained 0.8 percent to $1,493.29 an ounce by 8:19 p.m. EDT, below the record high of $1,497.20 hit in the previous session.

NYMEX crude for May delivery, which expires on Tuesday, was down 6 cents at $107.06 a barrel by 8:35 p.m. EDT, after settling down $2.54 at $107.12 a day earlier.

Brent crude for June fell 1 cent to $121.60 a barrel versus a $121.61 settlement in the previous session.