(Reuters) - Asian shares eased for a second day in a row Thursday, as investors limited their risk exposures on concerns about growth prospects in the world's two largest economies, the United States and China.
Commodity related assets were likely to be on the defensive after oil and copper fell the previous day, while a sharp decline in Chinese shares will weigh on the Australian dollar, as China is Australia's single largest export market.
MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> eased 0.1 percent, off a one-week high last Tuesday. Still, the index is set for a quarterly gain of about 12 percent at current levels, the best showing since the third quarter of 2010 and the best first quarter in 21 years.
Japan's Nikkei share average <.N225> opened down 0.5 percent, after Tuesday's highest level since the massive earthquake and tsunami on March 11, 2011.
Wednesday's data showed new orders for U.S. durables increased only modestly in February, below analysts' forecasts, while a gauge of future business investment also fell short of expectations, raising the prospect that economic growth in the first quarter could be lackluster.
The weak data sent copper down over 2 percent on Wednesday, as it raised doubts about the recovery pace in the world's largest economy.
Hong Kong and China shares fell on Wednesday as disappointing results from consumption-related companies added to investor concerns over mainland corporate profitability. The Shanghai Composite Index .SSEC suffered its worst day since last November, slipping 2.7 percent.
With the Chinese stock markets under pressure, the outlook on AUD will unlikely turnaround until we see some confirmation that the Chinese economy is not weakening too much and which should be affirmed by the release of the Chinese PMI (on Sunday), said analysts at BNP Paribas.
The Australian dollar stood at $1.0388, well off a one-week high around $1.0557 reached on Tuesday. The euro was up 0.1 percent to $1.3327.
Asian credit markets were softer, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by a couple of basis points early on Thursday.
EUROPE IN RADAR
Investor sentiment and risk appetite were hurt also by a recent spike in oil prices which threatened to further burden the fragile state of the global economy.
French ministers said on Wednesday that France was in talks with the U.S. and Britain on a possible release of strategic oil stocks to force fuel prices lower, four weeks before France's presidential election.
Oil also fell on data showing U.S. crude oil inventories posted the largest weekly build since July 2010.
Brent crude, up more than 15 percent this quarter, settled 1.1 percent lower at $124.16 per barrel, while U.S. crude futures inched up 0.2 percent to $105.64 a barrel on Thursday, after settling down 1.8 percent.
A warning on Wednesday from European Central Bank Governing Council member Jens Weidmann, who also heads Germany's Bundesbank, sent markets a clear reminder the deep-rooted debt problem in the euro zone will take a very long time to resolve.
Weidmann urged policymakers to address the roots of the crisis, saying that raising the firewall around the euro zone higher will only buy time and end up running into financial and political constraints. His cautious remarks preceded a meeting of European Union economic and financial affairs ministers in Copenhagen on Friday and Saturday.
We are particularly bearish on the EUR, as we expect a re-emergence of sovereign concerns, and we also see downside for the AUD and modest weakness for CAD, Morgan Stanley said in a research note.
The window for USD strength has been pushed back to later this year. As has been true for the past few years, US economic growth has surprised to the upside at the outset of the year ... As in the prior years, we expect growth to disappoint over the course of the year, it said.
(Additional reporting by Ian Chua in Sydney; Editing by Michael Perry)