Asian shares fell on Friday as investors cooled expectations that U.S. Federal Reserve Chairman Ben Bernanke will offer any signal of a further monetary stimulus when he speaks at an annual Jackson Hole meeting of central bankers later in the day.
The Wyoming gathering precedes the Fed's September 12-13 policy meeting, with views mixed over whether the central bank would embark on additional monetary stimulus, and if so, whether it would be a forceful quantitative easing or something else.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> eased 0.2 percent to a fresh four-week low. European shares and the Dow Jones industrial average <.DJI> also touched their lowest in four weeks on Thursday.
Japan's Nikkei stock average <.N225> opened down 1 percent. <.T>
"Expectations are being adjusted...as one of the reasons for August's brisk risk appetites may be wiped out," Lee Sang-jae, an analyst at Hyundai Securities, wrote in a note.
Australian shares <.AXJO> and the currency were pressured by sliding iron ore prices, which plumbed their lowest levels since late 2009 <.IO62-CNI=SI>. The ore is Australia's single biggest export earner.
The Australian dollar traded at $1.0280, near a five-week low. The euro held steady at $1.2511 in recent ranges, as did the dollar against the yen, trading at 78.53.
Data published on Friday showed Japan's industrial output unexpectedly fell in July while Japanese manufacturing activity contracted in August to the lowest level in 16 months.
Sentiment remained underpinned by hopes central banks will take additional easing measures to support fragile global growth, but investors have been shifting focus to concerns about demand slackening in China and uncertainty over Europe's plan to tackle its debt crisis as key events neared.
The monthly U.S. jobs report due on September 7 could shed clearer light to the Fed's policy decision, and the German constitutional court ruling on the region's bailout funds on September 12 could affect the implementation of the European Central Bank's planned bond-buying scheme aimed at driving down soaring borrowing costs in struggling countries such as Spain and Italy.
Euro zone finance ministers meet on September 14-15 while Greece awaits a review by international lenders of its austerity reforms due by early October, which could clear the way for a crucial bailout.
As markets mark time with persistent bias for more stimulus, assets will become even more expensive as investors flock to limited opportunities.
"As investors return from vacation and try to find worthwhile places to put money, they will be greeted with a familiar but worsening problem: little is cheap, with most assets even more expensive than they were before," said Kit Juckes, currency strategist at Societe Generale, citing the Australian dollar as an example.
"While easy money does little for growth, investors will continue to be squeezed out of 'safe' assets and drawn to corporate debt, equities and 'foreign stuff'. The Fed will continue to help asset prices and undermine the dollar."
EUROPE MAKING NOISE
Even if Bernanke fails to give any clues on the possible policy decision next month, investors could still cling on to hopes the ECB will take concrete action to soothe euro zone bond market jitters. Some confidence was reflected in a successful Italian bond auction on Thursday when Italy sold 7.3 billion euros of 10-year bonds at yields below 6 percent.
Although the ECB may give details of its bond-buying scheme as early as its September 6 policy meeting, it may not intervene before it is satisfied that the euro zone's permanent rescue fund is operational.
Spain, faced with snowballing regional debts which were threatening the sovereign financing and fuelling speculation the country may need to seek a bailout, has ruled out such an option until aid conditions are made clear.
As Europe struggles on its way to fiscal consolidation, the European Commission, the executive arm of the European Union, plans to give the ECB oversight of all banks in the euro zone, a German newspaper reported.
European Union leaders agreed in June to set up a single banking supervisor for Europe centred around the ECB, a plan they hope will help break the "vicious" link between the euro zone's debt crisis and struggling banks.
Oil steadied, with U.S. crude and Brent little changed at $94.61 and $112.63 a barrel respectively.
On Thursday, Brent edged higher in choppy trading, supported by supply concerns and geopolitical tensions, while U.S. crude fell as oil companies assessed damage after Hurricane Isaac swept the Gulf Coast region.
(Additional reporting by Joyce Lee in Seoul; Editing by Eric Meijer)