By Chikako Mogi
TOKYO (Reuters) - Growing doubts over the health of global economies pushed Asian shares lower on Thursday, adding to investor caution before the European Central Bank meeting later in the day that could see interest rates cut to support growth.
Investor sentiment has weakened as oil futures and U.S. stocks dropped overnight after the latest U.S. economic data cast doubts about the strength of the world's biggest economy.
The euro zone recession was behind mounting market expectations for the ECB to lower its main interest rate by 25 basis points to a record low 0.5 percent, while sluggish U.S. demand may be slowing China's economic recovery.
On Thursday, the final HSBC Purchasing Managers' Index dropped to 50.4 in April from March's 51.6 and a tad below a flash reading of 50.5, as new export orders fell for the first time this year.
Concerns about slow demand from China, Australia's top consumer and the world's second-largest, weighed on Australian shares and its currency while also hitting Chinese shares and Shanghai copper.
"The trend in the Chinese economy continues to improve and it has not lost momentum, but it is fragile and vulnerable to outside shocks, namely the U.S. economy which is showing signs of pausing," said Hirokazu Yuihama, a senior strategist at Daiwa Securities in Tokyo.
"Market tone is dictated by the tug-of-war between growth prospect worries and support from sustained monetary stimulus. Weaker U.S. growth may prompt profit taking in Asian equities which have outperformed earlier this year, keeping regional markets in ranges," Yuihama said.
MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> fell 0.5 percent, with Australian shares <.axjo> leading the decline as miners dragged the key index down 0.8 percent.</.axjo></.miapj0000pus>
"What we're seeing today is the material stocks lagging, pulling the market down, there's still no real conviction in the major mining stocks despite them being at pretty depressed levels," said Peter Esho, investment adviser at Wilson HTM Investment Group, of Australian shares.
Shanghai shares <.ssec> were down 0.3 percent after earlier touching 2013 lows while a sharp slide for CNOOC made the Chinese oil major the largest drag on Hong Kong's Hang Seng Index <.hsi> which eased 0.4 percent. Shanghai copper fell nearly 5 percent to a session low of 49,240 yuan per metric ton (1.1023 tons).</.hsi></.ssec>
Japan's Nikkei stock average <.n225> slipped 0.5 percent, heading for a fourth straight session of losses, which would mark the longest such losing run since November, just before Prime Minister Shinzo Abe starting making election-campaign promises of expansionary monetary and fiscal policies to spur growth.</.n225>
Japanese financial markets will be closed on Friday and Monday for public holidays. <.t></.t>
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The dollar recovered from lows against a basket of six major currencies <.dxy> but stayed near its lowest since late February at 81.331 hit on Wednesday, after the U.S. Federal Reserve kept its plan to buy $85 billion in bonds each month, as was widely expected.</.dxy>
The dollar's weakness lifted the euro to a two-month high of $1.3243 on Wednesday, and the common currency was steady around $1.3178 this session.
"Poor growth prospects remain a major deterrent to credit demand in the euro zone. The lack of credit demand points to further contraction in the region. This poor prognosis along with the disappointing read on Germany's PMI in April should see the ECB ease policy," Barclays Capital said in a research note.
The dollar fell 0.1 percent against the yen to 97.30, pressured by emerging signs of weakness continuing in the second quarter.
A private ADP report on employment on Wednesday showed 119,000 jobs were created in April, far fewer than the 150,000 forecast, prompting apprehension over the key government nonfarm payrolls data for April due on Friday. The U.S. economy likely added 145,000 jobs. March fell severely short of expectations at 88,000 -- triggering a sell-off in riskier assets.
Also on Wednesday, a private U.S. factory activity gauge fell in March, with its employment index also declining.
"The feeling that the economy was subject to downside risks remained a feature, while the Fed hinted that it could alter the amount of its bond purchases in either direction in response to incoming data," Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York, said in a note to clients.
The Fed gave few indications of any new response to worsening economic data in a statement released after its two-day meeting ended on Wednesday. The U.S. central bank cited risks to growth from recent budget tightening in Washington and reiterated that unemployment is still too high for policymakers' comfort.
U.S. crude futures rose 0.2 percent to $91.17 a barrel and Brent added 0.3 percent to $100.26.
(Additional reporting by Thuy Ong in Sydney; Editing by Eric Meijer)