* MSCI Asia ex-Japan drops 0.6 pct, Nikkei eases 0.2 pct
* Euro steadies, dollar up 0.1 pct vs yen
* Oil slips but gold gains
TOKYO, Aug 15 (Reuters) - Asian shares fell on Wednesday as
investors booked gains from recent rallies after data showing
strong U.S. retail sales and Germany and France avoiding a
contraction last quarter calmed sentiment, with weak euro zone
growth sustaining stimulus hopes.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.6 percent after Tuesday's 0.7 percent
rise. The index was up about 2.8 percent from this month's low
hit before optimism for more stimulus in coming weeks from the
European Central Bank and the Federal Reserve inspired a
broad-based rally earlier this month.
Japan's Nikkei stock average fell 0.2 percent.
"The broad, underlying trend driving markets right now amid
a lack of clear direction is that investors are not yet fully
convinced about putting risk back on, so when markets rally,
they take profits and they buy back when prices fall," said
Kyoya Okazawa, head of equity and derivatives at BNP Paribas.
"Having said that, the euro zone's data yesterday actually
bolstered the ECB's policy freedom as a slowdown in Germany
reduces inflation pressures there. For markets, whether policy
responses are coming through or not, is the key concern right
now, rather than concerns about growth," Tokyo-based Okazawa
said.
Markets will be watching the Jackson Hole meeting of central
bankers and economists at the end of the month and the U.S.
nonfarm payrolls data due early in September, as well as the
ECB's policy meeting early next month for signs of future policy
actions, analysts said.
U.S retail sales rose 0.8 percent in July for the first time
in four months for the largest gain since February as demand
climbed for consumer goods, suggesting that households could
drive faster economic growth in the third quarter after the
second quarter's slowdown.
The euro zone's economy shrank 0.2 percent in the second
quarter, having flatlined in the first, falling prey to its
prolonged debt woes while core economies Germany and France
withstood contraction.
But Germany's forward-looking ZEW sentiment index slid for a
fourth month running, clouding the outlook for the region's
growth engine.
COMMODITIES MIXED
Strong U.S. retail sales boosted oil, copper and the dollar
but U.S. stocks lost momentum on Tuesday, while European shares
rallied as weak euro zone growth made the case for further
policy moves to support recovery.
Copper steadied at $7,419.50 a tonne while oil
reversed course and fell after rallying on Tuesday.
Brent oil futures fell 0.4 percent to $113.61 a
barrel after ending at a fresh three-month high on Tuesday due
to strong U.S. retail sales, tighter North Sea crude supplies
and speculation about economic stimulus. U.S. crude also
fell 0.4 percent to $93.08 after closing up nearly 1 percent.
Spot gold added 0.2 percent to $1,601.46 an ounce
after falling as much as 1 percent the previous session when
investors scaled back their expectations for the Fed's further
easing following the solid U.S. retail sales data.
The dollar extended gains against the yen, up 0.1 percent at
78.77 yen, near its one-month high of 78.94 yen hit on
Tuesday.
"The USD benefits from better US data (retail sales). For
now, it is mostly USD/JPY trying to break higher as the back end
of the US Treasury curves comes under pressure," said Sebastien
Galy, senior currency strategist at Societe Generale in New
York, in a research note.
He added that the euro is supported against the dollar as
investors look for yield in European bonds. The euro steadied at
$1.2324.
Japanese government bonds slipped on Wednesday, tracking
declines in U.S. Treasuries and German government bond prices on
Tuesday, when uncertainty over whether the U.S. data could still
justify further easing by the Fed and the resilience of the
German economy prompted investors to cut some safe-haven bids.
Okazawa at BNP Paribas said the recent gradual rise in
safe-haven sovereign yields reflected money returning to
equities.
Asian credit markets were subdued, with the spread on the
iTraxx Asia ex-Japan investment-grade index barely
changed.
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