In This Article:
(Recasts lead, adds analyst comments, updates levels throughout)
* MSCI ex-Japan slip from 2-1/2 month highs
* Euro near three-week highs as ECB seen tapering stimulus
* U.S. jobless claims drops, pointing to tightening labour market
* Copper at 4-1/2 year highs, oil prices strong
By Swati Pandey
SYDNEY, June 8 (Reuters) - Asian shares stepped back from a 2-1/2 month high on Friday as risk appetite soured on bets that Europe's massive monetary stimulus was nearing an end, compounded by uncertainty over trade relations ahead of a key meeting of global leaders.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent after six straight sessions of gains took it to the highest since mid-March.
Chinese shares slipped, with the blue-chip Shangai-Shenzhen index down 0.6 percent. Hong Kong's Hang Seng declined 0.7 percent while South Korea's KOSPI was off 0.4 percent.
Japan's Nikkei and Australian shares were barely changed.
The European Central Bank will debate next week whether to end bond purchases later this year, the bank's chief economist said on Wednesday, a hawkish message that sent the euro to a three-week top, hit emerging markets, and spurred demand for safe-haven bonds.
"Markets are having to rediscover how to price risk amid reduced central bank buying and that adjustment could prove very hard," said Matt King, Citi's global head of credit strategy.
Another major reason for the nerves was the widening rift between the United States and its major trade partners after President Donald Trump imposed import tariffs on steel and aluminium imports last week.
Trump seemed in no mood to reconcile when he tweeted, just one day before a Group of Seven summit, that France and Canada imposed "massive tariffs" on their imports from the United States and had non-monetary barriers to trade.
The summit takes place on Friday and Saturday in Charlevoix, Quebec.
"Uncertainly ahead of the weekend's G7 meeting led to a downturn in risk appetite throughout the U.S. session," said Nick Twidale, Sydney-based analyst at Racketing Securities Australia.
"Risk trades were lower across the board in the currency markets as the yen and Swiss francs appreciated against the greenback and on the crosses. We saw more volatility in the emerging markets."
The S&P 500 and Nasdaq ended lower on Wednesday while Treasuries gained.
In emerging market currencies, the South African rand , Brazil's real and the Mexican peso were the worst hit overnight.
CURRENCIES, COMMODITIES
Risk appetite also waned after U.S. jobless claims pointed to a further tightening in labour market conditions, cementing expectations the Federal Reserve will raise benchmark U.S. rates next week and twice again later in the year.