Euro Slides to 11-Year Low Before ECB; China Stocks Slip

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Asian stocks slipped on Thursday after Wall Street continued to pull back from record highs ahead of Friday's closely-watched U.S. jobs data, while the nervous euro languished at an 11-year low prior to the European Central Bank's policy meeting.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.4 percent with Thai, Malaysian and Chinese stocks posting losses.

Still, optimism stemming from widespread monetary easing supported the region's other stock markets.

Japan's Nikkei .N225 edged up 0.2 percent and South Korea's Kospi .KS11 was up 0.2 percent.

"Foreigners are continuing their buying spree on the back of increased global liquidity after quantitative easing by the ECB," said Lee Kyung-min, economist at Daishin Securities Co in Seoul.

In line with such gains spreadbetters forecast a slightly higher open for Britain's FTSE.FTSE, Germany's DAX .GDAXI and France's CAC .FCHI.

Risk asset markets, shored up by liquidity provided by easing-minded central banks around the world, will have a chance to confirm the ECB's easing stance when it holds a policy meeting later in the session.

The ECB, which starts its quantitative easing (QE), or bond-buying, program of more than 1 trillion euros this month, is expected to detail the plan after the meeting.

Edgy before the ECB's announcement on details of its QE scheme, the euro fell as far as $1.1055 EUR=, a low not seen since September 2003.

"This (ECB 1 trillion euro program) would not be so euro negative if the Federal Reserve were doing the same thing but not only did the U.S. central bank end its QE last October, but they are looking to take the next step and raise interest rates," said Kathy Lien, managing director for forex strategy at BK Asset Management.

"It is the reminder of this divergence that has driven EUR/USD to fresh 11-year lows."

The euro's weakness helped the dollar index .DXY rise to a new 11-year high of 96.114. Expectations that the Fed would raise rates as early as summer have fueled the dollar's recent rally. The global markets will look to Friday's U.S. jobs data for further confirmation that the world's largest economy is recovering enough to justify a rate hike. Economists polled by Reuters projected U.S. payrolls grew 240,000 in February, following growth of 257,000 in January. ECONUS

The dollar rose 0.2 percent to 119.855 yen JPY, still some distance from a three-week peak of 120.27 struck earlier in the week thanks to a spike in U.S. Treasury yields. The 10-year Treasury note yield US10YT=RR was at 2.117 percent after edging up to a two-week high of 2.142 percent overnight. The Australian dollar received a slight lift when the Reserve Bank of Australia's deputy governor said the currency was much closer to an appropriate level than it has been for the past few years.

In commodities, U.S. crude oil CLc1 added to overnight gains, rising 0.4 percent to $51.73 a barrel, and Brent gained 0.1 percent to $60.59 a barrel LCOc1. The lack of a deal in talks over Iran's nuclear program allayed fears of an imminent rise in oil supply from the OPEC nation, supporting oil.

The euro held declines against most major peers as the ECB prepares to buy 60 billion euros of assets a month to counter slowing growth and the threat of deflation. Norway’s krone slid 0.5 percent, heading for a sixth straight drop, its longest losing streak since July.

German factory orders unexpectedly contracted in January from a year before, data today showed, while a similar gauge from the U.S. is due. Services growth in the euro area fell short of analysts’ estimates last month, in contrast to strong U.S. data, reports showed yesterday.

New Zealand’s dollar slipped 0.7 percent to 75.37 U.S. cents, while Australia’s currency was little changed at 78.09 U.S. cents. A stronger Aussie and lower interest rates than the economy would normally warrant are unavoidable in an environment of international policy easing, central bank Deputy Governor Philip Lowe said. The Aussie was up 0.1 percent at $0.7825 AUD=D4. The currency hit a six-year nadir of $0.7627 early in February after the RBA cut interest rates to a record-low 2.25 percent. The RBA stood pat on policy earlier this week, but observers expect it to cut rates again sooner or later.