In This Article:
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei skids, China stocks struggle to bounce
* Beijing allows yuan to slip past 6.90 per dollar
* US benchmark yields make fresh 7yr top, underpin dollar
* Yen up on safety bid as risk appetite sours
By Wayne Cole
SYDNEY, Oct 9 (Reuters) - Asian shares hit 17-month lows on Tuesday as China allowed its currency to slip past a psychological bulwark amid recent losses in domestic share markets, a shift that pressured other emerging currencies.
The Pakistani rupee plunged about 5 percent in an apparent devaluation by the central bank, market participants said.
The IMF added to the malaise by cutting forecasts of global growth for both this year and next, including downgrades to the outlook for the United States, China and Europe.
"Risk sentiment is in a foul mood and stocks are sinking everywhere," JPMorgan analysts said in a note.
"With Chinese economic momentum continuing to weaken alongside increasing pressure from the United States, currency weakness is the obvious release valve," they warned. "A lurch through the 7.0 level by year end is possible."
China's central bank fixed its yuan at 6.9019 per dollar on Tuesday, so breaching the 6.9000 barrier and leading speculators to push the dollar up to 6.9120 in the spot market.
The drop should be a positive for exporters and did help Shanghai blue chips edge up 0.3 percent. Yet that follows a 4.3 percent slide on Monday which was the largest daily drop since early 2016.
MSCI's broadest index of Asia-Pacific shares outside Japan went flat after ending Monday at its lowest point since May last year.
Japan's Nikkei fell 1.3 percent, hurt in part by a rise in the safe-harbour yen.
On Monday, a senior U.S. Treasury official expressed concern at the fall in the yuan, adding that it was unclear whether Treasury Secretary Steven Mnuchin would meet with any Chinese officials this week.
On Wall Street, the tech-heavy Nasdaq had fallen for the third straight day on Monday and growth stocks were pressured by worries rising bond yields might ultimately hobble the economy.
The S&P 500 lost 0.04 percent and the Nasdaq Composite 0.67 percent, while the Dow rose 0.15 percent as defensive stocks found buyers.
NO SAFETY NET
Yields on 10-year Treasury paper notched a new seven-year top on Tuesday at 3.252 percent.
Treasuries have had a sort of safety net up to now as rising yields tend to dampen stocks and threaten the economic outlook, thus putting pressure on the Federal Reserve to go slow on policy tightening.
Yet recently the Fed has sounded so bullish on the economy and so hawkish on rates that the net has become frayed.