New whooping cough strain in US raises questions

NEW YORK (AP) — Researchers have discovered the first U.S. cases of whooping cough caused by a germ that may be resistant to the vaccine.

Health officials are looking into whether cases like the dozen found in Philadelphia might be one reason the nation just had its worst year for whooping cough in six decades. The new bug was previously reported in Japan, France and Finland.

"It's quite intriguing. It's the first time we've seen this here," said Dr. Tom Clark of the Centers for Disease Control and Prevention.

The U.S. cases are detailed in a brief report from the CDC and other researchers in Thursday's New England Journal of Medicine.

Whooping cough is a highly contagious disease that can strike people of any age but is most dangerous to children. It was once common, but cases in the U.S. dropped after a vaccine was introduced in the 1940s.

An increase in illnesses in recent years has been partially blamed on a version of the vaccine used since the 1990s, which doesn't last as long. Last year, the CDC received reports of 41,880 cases, according to a preliminary count. That included 18 deaths.

The new study suggests that the new whooping cough strain may be why more people have been getting sick. Experts don't think it's more deadly, but the shots may not work as well against it.

In a small, soon-to-be published study, French researchers found the vaccine seemed to lower the risk of severe disease from the new strain in infants. But it didn't prevent illness completely, said Nicole Guiso of the Pasteur Institute, one of the researchers.

The new germ was first identified in France, where more extensive testing is routinely done for whooping cough. The strain now accounts for 14 percent of cases there, Guiso said.

In the United States, doctors usually rely on a rapid test to help make a diagnosis. The extra lab work isn't done often enough to give health officials a good idea how common the new type is here, experts said.

"We definitely need some more information about this before we can draw any conclusions," the CDC's Clark said.

The U.S. cases were found in the past two years in patients at St. Christopher's Hospital for Children in Philadelphia. One of the study's researchers works for a subsidiary of Johnson & Johnson, which makes a version of the old whooping cough vaccine that is sold in other countries.

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JournaL: http://www.nejm.org

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Asian shares, euro pause ahead of ECB decision

TOKYO (Reuters) - Asian shares and the euro paused from recent gains on Thursday, as investors awaited the European Central Bank's policy meeting later in the day and President Mario Draghi's view on euro zone growth prospects, optimistic that the worst may be over.

"Risk assets traded heavily as market participants exercise caution ahead of the ECB, particularly with Europe's political crisis hampering sentiment," said Stan Shamu, market strategist at IG Markets. "There has been growing talk of currency wars lately and some are now saying the eurozone will soon consider a fixed rate for the single currency."

European markets are seen in tight ranges, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> would open flat to up 0.1 percent. A 0.1 percent drop in U.S. stock futures suggested a soft Wall Street start. <.l><.eu><.n/>

Japan's Nikkei stock average <.n225> ended down 0.9 percent, retreating from its highest level since October 2008 that it scaled on Wednesday as investors took a break from selling the yen. <.t/>

But shorter-dated Japanese government debt rallied, sending 5-year government bond yields to a record low of 0.135 percent and 5-year yields to their lowest since September 2002 at 0.030 percent, on expectations that the central bank will cut interest rates to zero.

The yen's broad weakness has been driven by expectations for radical reflationary policy from the Bank of Japan, under Prime Minister Shinzo Abe's push for a mix of anti-deflation policies.

"Hopes for 'Abenomics' are supporting the mood, but investors are also sensitive to the currency moves, so right now, even slight uncertainty on Europe can be a reason to pull back," said Hiroichi Nishi, an assistant general manager at SMBC Nikko Securities.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was down 0.1 percent near a one-week low, after reaching a 18-month high on Monday.

Shanghai shares <.ssec> were set to break an eight-day rising streak, as investors booked profits on Chinese financials after the central bank stressed the need to tackle inflation and speculative housing demand.

Australian shares gained 0.3 percent, outperforming their Asian peers, on a rise in index heavyweights National Australia Bank and Telstra Corp which reported higher earnings. Australian headline job figures for January beat market expectations.

Recent data suggesting a moderate global economic recovery, even if it lacked strong momentum, underpinned industrial metals, keeping London copper prices near four-month highs and platinum and palladium near their highest level in 17 months on hopes of improved demand.

Data from deflation-swamped Japan was also positive, with the country's core machinery orders surging unexpectedly in December for a third straight month of increases, with firms expecting further improvement in the first quarter.

But analysts said Asian economies were still relying on exports to power their way to growth.

"One of the pillars of our bullish view on Asian currencies at the start of the year was the theme of global rebalancing, in which Asian economies would move away from export-dependent growth models towards a more domestic demand-driven model, allowing their currencies to appreciate to dampen their export competitiveness in favor of stronger terms of trade," said Morgan Stanley in a research note.

"However, Asian economies have been slower in the rebalancing process than we had envisioned, as seen by the heavy physical and verbal FX intervention this year."

FATE OF DRAGHI MAGIC

Growing optimism that the euro zone economy may be nearing a bottom has propelled the euro to a 14-1/2-month high against the dollar, a 34-month peak against the yen and 15-month top on sterling.

The ECB is expected to keep interest rates at a record low 0.75 percent at later on Thursday. Traders will focus on any comments about the euro's recent strength as well as the bank's view on the euro zone economy.

Vassili Serebriakov, strategist at BNP Paribas, said the ECB will likely reason that the euro's strength is due to real improvement in the financial markets and economic outlook, and thus does not warrant immediate action.

Draghi's strong verbal commitment to defend the euro and the ECB's new bond-buying scheme to help ease funding strains in highly-indebted euro zone members had significantly reduced risks of the region crumbling under the weight of its debt woes.

But a corruption scandal in Spain and uncertainty over the outcome of an Italian election later this month brought market focus back to the region's potential political instability.

"The scandal stirs memories of past scandals, and there's the possibly that it, too, could become a bigger matter, so this is making some investors cautious," said Kimihiko Tomita, head of forex at State Street in Tokyo.

The euro steadied around $1.3526, off a 14-1/2-month high against the dollar of $1.3711 hit last week.

The dollar eased 0.1 percent to 93.57 yen after touching 94.075 yen, its highest since May 2010 on Wednesday. The euro steadied at 126.60 yen, off Wednesday's 127.71 yen, its strongest since April 2010.

U.S. crude rose 0.1 percent to $96.76 a barrel and Brent also added 0.2 percent to $116.90.

(Additional reporting by Ayai Tomisawa and Lisa Twaronite in Tokyo; Editing by Sanjeev Miglani and Eric Meijer)

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Tsunami Causes Damage, Possible Deaths, on Solomon Islands

AUCKLAND, New Zealand — A powerful 8.0 magnitude earthquake caused a tsunami that sent strong waves crashing into several South Pacific islands, with officials in the Solomon Islands fearful that some residents had lost their lives.

The earthquake prompted tsunami warnings and watches from several island chains to Australia and later New Zealand, but many of those were later canceled.

The low-lying Solomon Islands, however, were not spared. George Herming, a government spokesman, said the tsunami sent two nearly five-foot waves into the western side of Santa Cruz Island, damaging at least 50 homes.

The police commissioner of the islands, John Lansley, said his patrols reported that at least four people and perhaps more were likely killed by the waves and ensuing flooding.

Richard Dapo, a school principal on an island near Santa Cruz, told the Associated Press that he had been getting calls from families on the coast whose homes had been damaged by the waves. 

“I try to tell the people living on the coastline, ‘Move inland, find a higher place. Make sure to keep away from the sea. Watch out for waves,’” he said.

The earthquake struck around 11 a.m. local time in the Santa Cruz Islands. There were conflicting reports as to the depth of the quake.

The Pacific Tsunami Warning Center said the tsunami warning was limited to the Solomon Islands, Vanuatu, Nauru, Papua New Guinea, Tuvalu, New Caledonia, Kosrae, Fiji, Kiribati, and Wallis and Futuna.

A lesser alert, a tsunami watch, was declared for American Samoa, Australia, Guam, the Northern Marianas, New Zealand and eastern Indonesia.

The earthquake was not only powerful but also shallow, which gave it significant potential to cause damage, said Barry Hirshorn, a geophysicist with the National Weather Service in Hawaii. Moreover, it was a thrust earthquake, he said, meaning that the sea floor moved up or down, not sideways, contributing to the potential for a dangerous tsunami.

But after the earthquake, as scientists watched to see how far a tsunami might spread, there were few early indications of a major threat beyond the immediate area, Mr. Hirshorn said. A water rise of about three feet had been observed close to the quake, he said, still high enough to be potentially damaging but probably not big enough to threaten distant shores.

In New Zealand, thousands of people were at the beach, swimming in the sea on a glorious summer afternoon on Waitangi Day, a national holiday — quite oblivious to the potential for a tsunami. Tsunami sirens were set off late in the afternoon there, and people in coastal areas were being told to stay off beaches and out of the sea, rivers and estuaries.

The New Zealand Herald reported Wednesday afternoon on its Web site that tsunami sirens in Suva, the capital of Fiji, had been warning people to stay inside or go to higher ground.

The Sydney Morning Herald reported on its Web site on Wednesday that the Solomon Islands’ National Disaster Management Office had advised those living in low-lying areas, especially on Makira and Malaita, to move to higher ground.

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Kim Kardashian's Pregnancy Is No Reason to Speed Divorce, says Kris Humphries

By Mike Fleeman

02/05/2013 at 09:20 PM EST

Kris Humphries and Kim Kardashian

Seth Browarnik/StarTraks

Kim Kardashian's baby is not even born yet and already is being drawn into mama's divorce.

Kardashian, carrying boyfriend Kanye West's child, has bristled at what she sees as stall tactics by estranged husband Kris Humphries to close the legal books on their 72-day marriage.

But Humphries's lawyer Marshall W. Waller writes that "what is really going on here is that an 'urgency' in the form of an apparently unplanned pregnancy" is being used by Kardashian as "an opportunity to gain a litigation advantage (to) prematurely set this matter for trial."

He adds parenthetically that the pregnancy is "something (Humphries) had nothing to do with."

Waller explains his reasoning for calling the pregnancy as unplanned: "Indeed, why would (she) plan to get pregnant in the midst of divorce proceedings?"

Kardashian, herself, recently addressed the timing.

"God brings you things at a time when you least expect it," she said last month. "I'm such a planner and this was just meant to be. What am I going to? Wait years to get a divorce? I'd love one. It's a process."

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Critics seek to delay NYC sugary drinks size limit

NEW YORK (AP) — Opponents are pressing to delay enforcement of the city's novel plan to crack down on supersized, sugary drinks, saying businesses shouldn't have to spend millions of dollars to comply until a court rules on whether the measure is legal.

With the rule set to take effect March 12, beverage industry, restaurant and other business groups have asked a judge to put it on hold at least until there's a ruling on their lawsuit seeking to block it altogether. The measure would bar many eateries from selling high-sugar drinks in cups or containers bigger than 16 ounces.

"It would be a tremendous waste of expense, time, and effort for our members to incur all of the harm and costs associated with the ban if this court decides that the ban is illegal," Chong Sik Le, president of the New York Korean-American Grocers Association, said in court papers filed Friday.

City lawyers are fighting the lawsuit and oppose postponing the restriction, which the city Board of Health approved in September. They said Tuesday they expect to prevail.

"The obesity epidemic kills nearly 6,000 New Yorkers each year. We see no reason to delay the Board of Health's reasonable and legal actions to combat this major, growing problem," Mark Muschenheim, a city attorney, said in a statement.

Another city lawyer, Thomas Merrill, has said officials believe businesses have had enough time to get ready for the new rule. He has noted that the city doesn't plan to seek fines until June.

Mayor Michael Bloomberg and other city officials see the first-of-its-kind limit as a coup for public health. The city's obesity rate is rising, and studies have linked sugary drinks to weight gain, they note.

"This is the biggest step a city has taken to curb obesity," Bloomberg said when the measure passed.

Soda makers and other critics view the rule as an unwarranted intrusion into people's dietary choices and an unfair, uneven burden on business. The restriction won't apply at supermarkets and many convenience stores because the city doesn't regulate them.

While the dispute plays out in court, "the impacted businesses would like some more certainty on when and how they might need to adjust operations," American Beverage Industry spokesman Christopher Gindlesperger said Tuesday.

Those adjustments are expected to cost the association's members about $600,000 in labeling and other expenses for bottles, Vice President Mike Redman said in court papers. Reconfiguring "16-ounce" cups that are actually made slightly bigger, to leave room at the top, is expected to take cup manufacturers three months to a year and cost them anywhere from more than $100,000 to several millions of dollars, Foodservice Packaging Institute President Lynn Dyer said in court documents.

Movie theaters, meanwhile, are concerned because beverages account for more than 20 percent of their overall profits and about 98 percent of soda sales are in containers greater than 16 ounces, according to Robert Sunshine, executive director of the National Association of Theatre Owners of New York State.

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Follow Jennifer Peltz at http://twitter.com/jennpeltz

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Asian shares recover on firm euro zone data, yen slips

TOKYO (Reuters) - Asian shares recovered on Wednesday as solid euro zone data calmed nerves jarred by potential political turmoil in Spain and Italy, while the prospect of a dovish new governor for the Bank of Japan dragged the yen to a new low.

Sentiment for other risk assets also improved, pushing London copper up 0.4 percent to $8,302.75 a tonne to a near four-month high, while Brent crude hovered near a 20-week high. Signs of recovery taking root in Europe, the United States and China have helped improve the demand outlook.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> added 0.3 percent, tracking an overnight gain in global equities on data showing the U.S. services sector extended a three-year expansion in January and business activity in the euro zone climbed to a 10-month high last month.

The Standard & Poor's 500 Index <.spx> and the Nasdaq Composite Index <.ixic> gained over 1 percent.

In Asia, investors have been quick to book profits as prices approached their highs, but analysts and traders say any dip was likely to be seen as a chance to buy back into the market.

The pan-Asian index scaled a 18-month high on Monday, and was up about 2.3 percent so far this year, considerably modest compared to the S&P's nearly 6 percent gain in the same period.

Australian shares <.axjo> jumped 0.9 percent, leading the regional peers.

"We're following on from a pretty good lead from global markets last night," said Steve Daghlian, market analyst at Commonwealth Securities, of Australian equities.

Brent crude was up 0.2 percent to $116.72 a barrel while U.S. crude was barely changed at $96.64.

Japanese equities and government bonds rose while the yen touched fresh lows on expectations for stronger reflationary policies from the BOJ.

The dollar touched 93.91 yen to its highest since May 2010, while the euro also rose to 127.65 yen, its loftiest since April 2010. The Aussie reached a 4-1/2 year peak around 97.42 yen. The pound touched a 3-year high near 147.25 yen.

Yen selling resumed after Bank of Japan Governor Masaaki Shirakawa said he would step down on March 19, three weeks earlier than the official end of his five-year term, leaving at the same time as his two deputies, and raising the prospect that the next BOJ governor will more readily adopt the expansionist monetary policy demanded by Prime Minister Shinzo Abe.

"The Bank of Japan is about to get a lot more dovish, and sooner than previously thought," said Christopher Vecchio, a currency analyst at DailyFX.

Japan's benchmark Nikkei stock average <.n225> soared 3.1 percent to a 33-month high. <.t/>

"I think the market could yet rise when they announce the new governor's name, particularly if it makes an asset purchase budget of 50 trillion yen ($535 billion) from the BOJ more likely," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley.

The 10-year JGB yield fell 1.5 basis points to 0.775 percent after opening higher, at 0.800 percent.

The euro drew support from growing confidence in the region's economy and improving funding conditions for deeply-indebted euro zone members.

News the European Central Bank's balance sheet fell to an 11-month low of 2.8 trillion euros ($3.8 trillion) as markets unwound some of the ECB's crisis funding measures underpinned the euro, coming in stark contrast to the U.S. Federal Reserve and the BOJ which keep expanding asset buying.

"Flows matter more than stock in currency markets when comparing central bank balance sheets ... highlighting the euro's outperformance over the last few months," said Ashraf Laidi, chief global strategist at City Index, in a note to clients.

The euro was steady at $1.3578, above a key technical support of its 14-day moving average at $1.34653.

The ECB is expected to keep interest rates unchanged at its policy meeting on Thursday, but its president may face a grilling over an Italian banking scandal.

Spanish and Italian yields fell on Tuesday after jumping on worries over a corruption scandal in Spain and polls showing Italy's former prime minister Silvio Berlusconi regaining ground before elections this month.

The yen's fall lifted benchmark Tokyo gold futures to a record high of 5,067 yen per gram on Wednesday.

(Additional reporting by Ian Chua and Thuy Ong in Sydney and Ayai Tomisawa and Sophie Knight in Tokyo; Editing by Sanjeev Miglani)

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IHT Rendezvous: IHT Quick Read: Feb. 5

NEWS Gen. Moisés García Ochoa was blocked from becoming defense minister of Mexico after American officials expressed their concern that he had ties to drug traffickers. Ginger Thompson reports from New York, Randal C. Archibold from Mexico City, and Eric Schmitt from Washington.

On Monday, confirming what many historians and archaeologists had suspected, a team of experts at the University of Leicester concluded on the basis of DNA and other evidence that the skeletal remains were those of King Richard III, for centuries the most reviled of English monarchs. John F. Burns reports from Leicester, England.

In a major victory for feminists and the rule of law, a Beijing court has granted a woman a divorce on grounds of abuse and made history by issuing a three-month protection order against her ex-husband — a first in the nation’s capital, Beijing, according to lawyers and the Chinese media. Didi Kirsten Tatlow reports from Beijing.

The Thai government faces the quandary of what to do with all the creatures it has saved — a sort of Noah’s ark of endangered species. Thomas Fuller reports from Khao Pratubchang, Thailand.

A strike by garbage collectors in Seville, Spain, is entering its second week and threatening to turn into a health and safety issue in one of Spain’s most touristic cities. Raphael Minder reports from Seville, Spain.

Days ahead of a summit meeting where leaders of the European Union’s 27 member states are to wrestle again with a proposed seven-year budget, a spokesman for the bloc’s executive body was forced to defend the salaries of some officials. James Kanter reports from Brussels.

It was only a few years ago that some economists were arguing that Europe was “decoupling” from its long dependence on trade with the United States, but German carmakers proved otherwise. Jack Ewing reports.

FASHION This month Natalie Massenet, the founder of Net-a-Porter and Internet guru to the fashion world, will throw her might behind London Fashion Week. Suzy Menkes reports from London.

ARTS Song Dong gathered multitudes in Hong Kong and asked them to help complete his autobiographical “36 Calendars” project. Joyce Lau reports from Hong Kong.

SPORTS A 19-month investigation found that criminal groups had infiltrated European and international soccer with hundreds of people involved in match-fixing, global law enforcement officials said. Sam Borden reports.

It would be naïve to believe that soccer is beyond corrupting, or to doubt that the allegations by police investigators in the Netherlands on Monday are anything but the smallest ripples on an enormous global pond. Rob Hughes reports from London.

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Jillian Michaels: My Son Phoenix Is 'Fiery' Like Me

Mom & Babies
Celebrity Baby Blog

02/04/2013 at 03:00 PM ET

Gregg DeGuire/WireImage

Jillian Michaels‘ son Phoenix is already taking after his mama — just not the expected one!

Although The Biggest Loser trainer expected her baby boy to inherit her partner’s laidback approach to life — Heidi Rhoades delivered their son in May — the 8-month-old’s budding personality is the polar opposite.

“He wants to walk and he gets really pissed about it when he can’t. He gets frustrated,” Michaels, 38, told PEOPLE at the recent TCAs.

“He’s a fiery little sucker, he’s just like me. I’m like, ‘You were supposed to be like Heidi!’ But he’s not. It’s not good, not good.”

Admitting she is “terrified for when he’s a teenager,” Michaels has good reason to be: Recently she spotted her son — who is “crawling aggressively” — putting his electrician skills to the test in the family room.

“He’s into everything, which is kind of a nightmare to be totally honest,” she says. “We have an outlet in the floor in the living room and I caught him eating the outlet on the floor … I was like, ‘Mother of God!’”

Phoenix’s big sister Lukensia, 3, has also been busy keeping her mamas on their toes. “Lu just had her first ski trip and she had a little crush on her teacher, Ollie,” Michaels shares.

“At first I was like, ‘Oh my God, we’re letting our baby go!’ The second day we took her she ran right to him — loves Ollie.”

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Bullying study: It does get better for gay teens

CHICAGO (AP) — It really does get better for gay and bisexual teens when it comes to being bullied, although young gay men have it worse than their lesbian peers, according to the first long-term scientific evidence on how the problem changes over time.

The seven-year study involved more than 4,000 teens in England who were questioned yearly through 2010, until they were 19 and 20 years old. At the start, just over half of the 187 gay, lesbian and bisexual teens said they had been bullied; by 2010 that dropped to 9 percent of gay and bisexual boys and 6 percent of lesbian and bisexual girls.

The researchers said the same results likely would be found in the United States.

In both countries, a "sea change" in cultural acceptance of gays and growing intolerance for bullying occurred during the study years, which partly explains the results, said study co-author Ian Rivers, a psychologist and professor of human development at Brunel University in London.

That includes a government mandate in England that schools work to prevent bullying, and changes in the United States permitting same-sex marriage in several states.

In 2010, syndicated columnist Dan Savage launched the "It Gets Better" video project to encourage bullied gay teens. It was prompted by widely publicized suicides of young gays, and includes videos from politicians and celebrities.

"Bullying tends to decline with age regardless of sexual orientation and gender," and the study confirms that, said co-author Joseph Robinson, a researcher and assistant professor of educational psychology at the University of Illinois in Urbana-Champaign. "In absolute terms, this would suggest that yes, it gets better."

The study appears online Monday in the journal Pediatrics.

Eliza Byard, executive director of the Gay, Lesbian & Straight Education Network, said the results mirror surveys by her anti-bullying advocacy group that show bullying is more common in U.S. middle schools than in high schools.

But the researchers said their results show the situation is more nuanced for young gay men.

In the first years of the study, gay boys and girls were almost twice as likely to be bullied as their straight peers. By the last year, bullying dropped overall and was at about the same level for lesbians and straight girls. But the difference between men got worse by ages 19 and 20, with gay young men almost four times more likely than their straight peers to be bullied.

The mixed results for young gay men may reflect the fact that masculine tendencies in girls and women are more culturally acceptable than femininity in boys and men, Robinson said.

Savage, who was not involved in the study, agreed.

"A lot of the disgust that people feel when you bring up homosexuality ... centers around gay male sexuality," Savage said. "There's more of a comfort level" around gay women, he said.

Kendall Johnson, 21, a junior theater major at the University of Illinois, said he was bullied for being gay in high school, mostly when he brought boyfriends to school dances or football games.

"One year at prom, I had a guy tell us that we were disgusting and he didn't want to see us dancing anymore," Johnson said. A football player and the president of the drama club intervened on his behalf, he recalled.

Johnson hasn't been bullied in college, but he said that's partly because he hangs out with the theater crowd and avoids the fraternity scene. Still, he agreed, that it generally gets better for gays as they mature.

"As you grow older, you become more accepting of yourself," Johnson said.

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Online:

Pediatrics: http://www.pediatrics.org

It Gets Better: http://www.itgetsbetter.org

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AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner

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Asian shares drop on euro zone worry, soft U.S. data

TOKYO (Reuters) - Asian shares, oil and the euro fell on Tuesday as investors took profits from recent rallies, while the yen got a respite from broad-based selling.

European markets are seen barely changed, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> would open up nearly flat. But a 0.1 percent gain in U.S. stock futures suggested a firm open on Wall Street. <.l><.eu><.n/>

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> tumbled 0.9 percent, dragged lower by a steep 1.7 percent fall in Hong Kong shares <.hsi>. The pan-Asian index climbed to a 18-month high on Monday.

Japan's benchmark Nikkei stock average <.n225> closed down 1.9 percent, after scaling a 33-month high on Monday. <.t/>

Positive data from China failed to brighten the bearish mood, after the Standard & Poor's 500 Index <.spx> had its worst day since November on Monday on discouraging U.S. factory orders and worries that a potential political shake-up could disrupt the euro zone's efforts to resolve its debt crisis.

Analysts and traders said selling was a correction to markets rallying on receding tail risks such as growing euro zone stability and an improving global economic outlook, while global monetary easing still underpinned sentiment.

"This move in equities ... looks to be a healthy correction, nothing more," said Richard Yetsenga, Head of Global Markets at ANZ Research, adding that downside risk would likely convince major central banks globally to stick to easy policy.

In China, the HSBC services purchasing managers' index rose to a four-month high of 54 in January from December's 51.7, underlining confidence in the world's second-biggest economy, which is expected to grow 8.1 percent this year, off a 13-year low of 7.8 percent hit in 2012.

"The data globally is unquestionably better but the recovery still seems gradual. (China) hit the bottom and they had a bit of a bounce but nothing much else happened. We don't really seem to have preconditions for a much stronger bounce than that (8 percent growth)," Yetsenga said.

The Australian dollar fell 0.3 percent to $1.0405 after the Reserve Bank of Australia kept its cash rate steady at 3.0 percent, as expected, having just cut in December. Australian shares <.axjo> fell 0.5 percent but trimmed some earlier losses after the RBA's rate decision.

The euro took the brunt of renewed focus on the euro zone problems, having risen 2.3 percent so far this year against the U.S. dollar, up about 5.4 percent against sterling and 1.8 percent higher against the Australian dollar.

The euro eased 0.2 percent to $1.3485, retreating further from Friday's 14-1/2-month peak of $1.3711, ahead of the European Central Bank's policy meeting on Thursday.

"Markets have been increasingly comfortable with European risks over the past few months and are largely not positioned for this increase in political problems. The outcomes in Spain and Italy are far from certain and may represent stumbling blocks for further expansion in risk appetite," Barclays Capital said in a research note.

Spain's opposition party on Sunday called for Prime Minister Mariano Rajoy to resign over corruption allegations, which Rajoy denies, pushing Spanish 10-year bond yields to six-week highs.

In Italy, 10-year Italian government bond yields hit their highest since late December, as chances of former prime minister Silvio Berlusconi regaining power raised worries about Rome's ability to fix its fiscal problems.

The yen took a breather, firming from lows against a broad range of currencies.

The dollar steadied at 92.36 yen after scaling its highest since May 2010 of 93.185 on Monday, while the euro eased 0.1 percent to 124.53 yen, off its loftiest since April 2010 of 126.97 hit on Friday.

"Markets are broadly undergoing a correction and the euro is definitely facing profit-taking, given the pace of its climb. Worries about the euro zone debt crisis always remain a downside risk for the euro, and could push it lower to $1.32-$1.33," said Hiroshi Maeba, head of FX trading Japan at UBS in Tokyo. "But the trend is still upward for dollar/yen, cross/yen. The dollar could reach 95 yen by the end of the month."

As long as markets hold out expectations for the Bank of Japan to implement aggressive monetary easing to beat decades of deflation in Japan, the yen will stay pressured. Any correction to the dollar's rise against the yen was also be seen as shallow, with many traders and analysts seeing a firm floor around 87-88 yen.

Italy & Spain bond yields: http://link.reuters.com/gat45t

Asset returns in 2013: http://link.reuters.com/dub25t

China, EU, US Services PMI: http://link.reuters.com/dyh85s

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Asian credit markets faltered with the plunge in equities, widening the spread on the iTraxx Asia ex-Japan investment-grade index by three basis points.

Brent crude slipped towards $115 per barrel, giving up some of its gains from the last three weeks, on renewed euro zone worries and a slightly firmer dollar.

(Editing by Eric Meijer)

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