* Shares in Asia fall as trade war looks longer, costlier
* Currency war fears linger
* Yuan slips but China seen limiting losses after big drop
* New Zealand cenbank stuns markets with 50bp rate cut
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano and Noah Sin
TOKYO/HONG KONG, Aug 7 (Reuters) - Shares in Asia fell for
an eighth straight session on Wednesday on lingering worries
over the escalating U.S.-China trade war, but losses and nerves
were soothed somewhat by White House assurances that it wants to
press ahead with negotiations.
Signs that China is stepping in to steady the yuan after its
recent sharp fall also helped ease investors' fears of a
possible global currency war, though the yuan slipped further in
morning trade, keeping markets guessing.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was little changed in early trade but turned
lower and was down 0.2% by 0459 GMT.
Japan's Nikkei .N225 slid 0.4% on worries that a stronger
yen will put more pressure on its struggling exporters. .T
Shares in Shanghai .SSEC were little changed after heavy
selling in the previous sessions, but Hong Kong's Hang Seng
index .HSI fell 0.4% in the morning.
Still, selling pressure was mild compared with the last few
sessions, when trade tensions intensified by the day.
MSCI Asia ex-Japan has tumbled 8.3% in its latest losing
streak.
S&P e-mini futures ESc1 fell 0.5%. Wall Street had gained
overnight and MSCI's broad gauge of stocks across the world
.MIWD00000PUS rose for the first day in seven sessions.
Panicky selling of riskier assets eased after the People's
Bank of China took steps to steady the yuan, with a
firmer-than-expected mid-point fixing on Tuesday and state banks
mopping up dollars, sources told
Reuters. Wednesday's yuan fixing was weaker, however, and just a hair
away from the key 7 per dollar level, keeping markets nervous
about China's intentions. Beijing let spot yuan break through
the 7 level on Monday for the first time in 11 years, days after
Washington threatened to impose more tariffs. CNY/
U.S. President Donald Trump dismissed fears of a protracted
trade war on Tuesday despite a warning from Beijing that
labelling it a currency manipulator would have severe
consequences for the global financial order. Washington
announced that move on Monday hours after the yuan tumbled.
While Trump played down the prospect that the trade dispute
could be drawn out, St. Louis Federal Reserve Bank President
James Bullard said the U.S. central bank may be stuck with a
volatile global trade environment for years.
Comments from Larry Kudlow, director of the White House
National Economic Council Kudlow, may have also tempered some
jitters. He said on Tuesday the Trump administration wants to
continue trade talks with China and is still planning to host a
Chinese delegation for talks in September. Many investors believe Trump cannot afford prolonged
instability in financial markets since his reputation was staked
so closely on economic growth and the success of the U.S. stock
market.
The offshore yuan CNH=D3 was trading at 7.0812 per dollar,
off a record low of 7.1382 on Tuesday but still down 0.39% on
the day.
Onshore yuan CNY=CFXS opened at 7.0369 and was changing
hands at 7.0458 at midday, down 0.3%.
For Beijing, further yuan weakness could "hurt as much as it
helps", said Stefan Hofer, chief investment strategist at LGT
Bank Asia in Hong Kong.
"It is counterproductive to depreciate to 8 or even 7.5 as
it increases costs to importers and debt service costs much
higher for Chinese issuers that borrow in dollars and have
income streams in renminbi," he said.
Overall, market sentiment remained fragile.
With currencies thrown into the mix of the trade war,
"investors with exposure to Asian equities are now faced with
multiple factors, rather than straightforward earnings outlook,"
said Jim McCafferty, head of equity research for Asia ex-Japan
at Nomura.
Goldman Sachs said it no longer expects a trade deal to be
struck before the November 2020 U.S. presidential election,
while Morgan Stanley warned that more tit-for-tat tariffs could
tip the world economy into recession by the middle of next year.
That rather grim backdrop supported safe-haven assets, with
gold hitting a six-year high of $1,489.76 per ounce XAU= on
Wednesday. It last stood at $1,485.
U.S. bonds have also retained much of their gains made in
the past week. The 10-year Treasuries notes yielded 1.66%
percent US10YT=RR , lowest since 2016, as investors bet on
another rate cut by the Federal Reserve in September.
In the currency market, the dollar traded at 106.10 yen
JPY= , down 0.33 on the day but off Tuesday's seven-month low
of 105.52.
The euro was up 0.1% at $1.1209 EUR= . The Australian
dollar fetched earlier stooped to 0.66775 AUD=D3 , a level not
seen since 2009.
The New Zealand dollar NZD=D4 slumped to $0.6378, a level
not seen since 2016, after the central bank eased more
aggressively than markets expected, cutting 50 basis points off
its official cash rate, to counter pressure on the economy from
global trade disputes. Oil prices also weakened, with global benchmark Brent crude
slipping to seven-month lows, as trade tensions between the U.S.
and China intensified worries about weakening world demand.
Brent crude LCOc1 futures were down 0.15% to $58.85 a
barrel, near its low on Tuesday of $58.55, a trough last seen in
early January.
(Editing by Shri Navaratnam and Kim Coghill)