Asian stocks dipped on Friday as investors fretted about earnings, while the euro recovered from early losses after Pakistan dismissed rumors of a coup.

The dollar <.DXY> eased 0.2 percent against a basket of major currencies, pulling back from an overnight rally sparked by another credit downgrade on Greece and residual effects of the Federal Reserve's upbeat comments on the U.S. economy this week.

The euro remained under pressure on concern about the eurozone after Greece was hit by another credit downgrade but it found support after Pakistan dashed rumors of a coup, which had sent it to a nine-month low against the Swiss franc in early trade as investors sought a safe haven.

By late morning the euro was up 0.3 percent at $1.4380, rebounding from a three-month low of $1.4304 on Thursday.

Pakistani President Asif Ali Zardari said there was no coup, dousing rumors that started after a government minister suspected of corruption was barred from leaving the country.

Gold stabilized after plunging 3 percent in New York where the dollar's rise reduced its appeal. It was quoted at $1,106.70 an ounce, up from a New York close at $1,097.80, but it is about 10 percent below a record high of $1,226.10 reached on December 3.

Gold's overnight slide triggered selling of resources stocks in Asia, helping push share markets in Australia and Japan down by 1 percent, while banking shares were hit after international regulators proposed tough new capital protection rules from 2012.

In Hong Kong, global bank HSBC <0005.HK> fell 1.4 percent, extending a 3.5 percent slide in its London shares on Thursday.

CURRENCY CONCERNS

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS>, and the Thomson Reuters index of regional shares <.TRXFLDAXPU>, were both down 0.7 percent.

The MSCI index has rallied more than 60 percent this year and investors are keen to lock-in gains ahead of the year-end, analysts say.

Sentiment in Asia was dented by a weak Wall Street where financial stocks were hurt by an influential analyst's downgrade of the earnings outlook for Morgan Stanley and Goldman Sachs

Citigroup shares tumbled 7 percent on weak demand for its stock and bond offering while economic bellwether FedEx slumped 6 percent on a soft profit outlook.

Nouriel Roubini, one of the few economists to have accurately predicted the magnitude of the global financial crisis, warned that global markets have rallied too much, too soon, too fast.

However, he said an imminent correction was unlikely because a cheap dollar would continue to encourage investors to see higher-yielding assets for a few months. [ID:nN17196911]. Roubini sees a dollar rebound in 6-12 months.

In Australia, shares of phone company Telstra fell 4 percent after the company cut its sales revenue forecast.

The country's biggest brewer Foster's Group , meanwhile, saw its shares drop 2.7 percent after warning that a strong Australian dollar and weak U.S. demand would cut profits at its wine business.

The Aussie dollar has surged 40 percent this year and some analysts have warned that equity investors have not sufficiently factored in its impact on Australia companies' foreign earnings.

It's been pushed to the back of people's minds, but the currency is certainly coming home to roost. It is adding to the nervousness in our market, said Daniel Manley, a dealer at Burrell & Co in Australia.

The oil price edged up 0.6 percent to $73.06 a barrel, supported by positive U.S. factory activity data.(Additional reporting by Victoria Thieberger in MELBOURNE and Jungyoun Park in SEOUL; editing by Kazunori Takada)

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