Asian stocks,commodities fall

8220;There is some risk reduction because the market wants to watch if Bernanke will say anything about a change of stance,8221; said Tetsu Emori,a Tokyo-based commodities fund manager at Astmax Investments.

8220;Any change of stance is highly unlikely.8221;

Fed Chairman Ben Bernanke will hold the first news conference ever by a Fed chief after the two-day policy committee meeting ends on Wednesday.

The euro also slipped after European Central Bank Governor Jean-Claude Trichet said that a strong dollar is in the interest of United States,though the prospects of widening interest rate differentials between the Fed and the ECB may check losses for the single currency.ID:nEBE7DA00T

Equity markets across the region were in the red with Japan8217;s Nikkei ending down more than 1 per cent. Shares outside Japan ,which last week hit their highest level since early 2008,were down about 0.8 per cent.

European shares were set to start weaker,tracking falls on Wall Street and in Asia,with key indices set to open 0.3-0.5 per cent lower.

Credit markets,too,reflected the overall cautious sentiment with credit spreads widening slightly as the broader market was wary of a heavy pipeline after a recent flood of issuances.

Issuance of dollar-,euro- and yen-denominated bonds from Asia ex-Japan have already exceeded 30 billion year-to-date,clearly ahead of the pace set in 2010,which saw record issuance of more than 83 billion.

AND THE WINNER THIS MONTH IS..

South Korea8217;s KOSPI dipped 0.4 per cent after hitting yet another record high earlier,though it is set to outperform regional indices in a big way this month.

The KOSPI8217;s near 5 per cent rise in April has been led by automakers and chipmakers with the former benefiting from the production hit suffered by Japanese competitors in the wake of last month8217;s earthquake and tsunami and the latter getting a boost from strong earnings by Intel and Apple.

While the broader market appeared overbought on some technical indicators,automakers offered attractive valuations,with Hyundai Motor shares trading at 10 times its 12-month forward price earnings multiples,compared with Toyota8217;s around 21,according to Starmine data.

EXTENDED PAUSE

In currency markets,the greenback came under a bit of selling pressure versus the yen in early trade but losses were limited on expected dollar demand from Japanese asset management firms as a number of investment trusts,or toushin,are due to be launched on Tuesday.

Trade was volatile as investors were reluctant to make big bets before the April 26-27 Federal Open Market Committee meeting while rate markets reflected that any tightening measure was going to be a long slow grind.

In fed fund futures markets,the contract expiring in December 2011 has fully priced in a target interest rate of 0.25 per cent,the top end of the central bank8217;s current rate range of zero to 0.25 per cent but the January 2012 contract only implied a slim 6 per cent chance of another hike to 0.5 per cent.

Such bets on a glacially slow increase in rates have kept traders interested in buying US Treasuries,pushing the 10-year US yield down more than 20 basis points from this month8217;s highs of 3.36 per cent,despite a recent warning of a ratings cut by ratings agency Standard amp; Poor8217;s.