Asia stocks slip, dollar underpinned by yield premium

 Japan's Nikkei lost 0.7 percent, edging away from its recent one-year top. Australia's main index eased 0.4 percent, having touched a 17-month peak the previous day. Asian shares slipped on Thursday after Wall Street suffered a mild setback after weeks of gains, while the dollar stayed in demand as US government debt offered ever-fatter premiums over euro zone bonds. Japan's Nikkei lost 0.7 percent, edging away from its recent one-year top. Australia's main index eased 0.4 percent, having touched a 17-month peak the previous day. MSCI's broadest index of Asia-Pacific shares outside 

Japan was off a slight 0.1 percent. The pullback on Wall Street came amid light volumes and likely reflected caution about what the New Year might bring, given Wednesday was the first session when trades actually settle in January. The Dow fell 0.56 percent, while the S&P 500 lost 0.84 percent and the Nasdaq 0.89 percent. Boeing fell 0.9 percent after Delta Air Lines cancelled a USD 4-billion order for 18 Dreamliner aircraft. Technology was the largest weight on major indexes, with Nvidia down 6.9 percent after short seller Citron Research said the market was overlooking the headwinds for the stock - which had earlier touched a record high. Weak home sales data were blamed for some of the selling, though normally this series barely gets a mention in markets. Contracts to buy previously-owned

 US homes fell in November to their lowest level in nearly a year, a hint of how rising mortgage rates could weigh on the housing market. The soft report combined with surprisingly strong demand for a sale of new five-year Treasury notes to give US bonds a rare rally. Yields on 10-year paper fell to their lowest levels in two weeks to around0 2.53 percent. Yet euro zone yields were also falling on concerns about the strength of a rescue plan for Italian banks and normal year-end caution. Germany's 10-year yields hit their lowest in seven weeks at 0.181 percent, while their discount to Treasury yields hit the widest on record. 

The ever-widening yield gap kept the euro on the defensive around USD 1.0424, after touching an eight-session trough of USD 1.0372. Sterling was also soft at USD 1.2226 after hitting its lowest in two months. The dollar was sidelined on the yen at 117.00 having spent the last seven sessions caught between 116.84 and 117.88. In commodity markets, oil came off the boil after data showed a surprise build in US crude inventories. US crude eased 42 cents to USD 53.64 a barrel, while Brent was last quoted down 16 cents at USD 55.93.