Asian stocks fell on Thursday as falling oil prices continued to feed into global growth concerns, while the dollar struggled against peers such as the yen and euro after a further drop in US bond yields.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent as another large decline in oil prices took a heavy toll on energy shares and hit Wall Street hard overnight.

The volatile Shanghai Composite Index shed earlier gains and fell 0.3 per cent.

Crude oil

Crude oil prices fell as much as 5 per cent overnight after data underscored weak US demand and Saudi Arabia reiterated that it has no plans to curb output.

US crude posted a modest rebound on Thursday after the overnight tumble, gaining 0.8 per cent to $61.44 a barrel after falling to a 5-1/2 year low of $60.43 on Wednesday.

Tokyo’s Nikkei lost 1 per cent, pulling further back from 7-1/2 year highs hit at the week’s start, with sentiment bruised by the rout in US stocks.

Dollar vs yen

The dollar edged up 0.2 per cent to 118.09 yen, getting some respite after retreating from a seven-year high of 121.86 reached on Monday.

The S&P 500, at a record high just last Friday, fell to its lowest since early November on Wednesday.

“Recent nervousness in equity market sentiment is consistent with our view that equity fund positioning is near peak levels, which points to a near-term pullback,’’ strategists at Barclays said in a note to clients.

“With underperformance by active managers, we worry that redemptions will continue and force an unwinding of currently extended positioning,’’ they said.

In addition to declining oil, concerns over the political situation in Greece have also dented appetite for risk assets.

The euro gained 0.1 percent to $1.2456, putting further distance between a 2-1/2 year trough of $1.2247 hit on Monday.

Still, the divergence in US monetary policy from Europe and Japan could continue to favour the greenback in the long term.

New Zealand’s central bank governor said he expected to see the most quantitative easing since 2011 around the world next year, particularly as economic risks in Japan and Europe remain.

“There are question marks around Japan and certainly in Europe,’’ Reserve Bank of New Zealand Governor Graeme Wheeler told a media briefing.

RBNZ benchmark rate

The RBNZ on Thursday held its benchmark rate at a near six-year high and signalled further modest rate rises over time. That propelled the New Zealand dollar to a nine-day high of $0.7872 and away from a 2-1/2 year low of $0.7609 plumbed Tuesday.

The Australian dollar rose 0.4 per cent to $0.8348 after data showed Australian employment in November showed a much higher than expected rise.

The Aussie, another recent beneficiary of the retreating greenback, had fallen to a 4-1/2 year low of $0.8223 on Tuesday.

Safe-haven government debt remained better-bid. The benchmark 10-year Japanese government bond yield touched 0.390 per cent, its lowest since April 2013.

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