Emerging debt-Asian bond spreads widen on global economy woes

HONG KONG, Aug 13 (Reuters) - Asian bond spreads widened on Wednesday, reversing a two-session tightening as regional shares plumbed a 17-month low, hit by concerns about a slowing global economy and continued woes in the financial sector.

The iTRAXX Asia ex-Japan high-yield index ITAHY5YIA= widened by 5 basis points (bps) to 550, while the equivalent investment-grade index ITAIG5YIA= moved out by 2 bps to 143.

Those levels are still below the record hit in mid-March before the Bear Stearns collapse -- with the high-yield index peaking then at above 650 -- but are more than double the spreads at the beginning of the year.

"With equity markets still weak, it's hard for credit to gain. There's still a lot of caution out there," said a Hong Kong-based trader.

The MSCI index of Asian stocks outside Japan .MIAPJ0000PUS fell 1.4 percent as of 0435 GMT, hitting at one point its lowest since March 2007 amid concerns about slowing growth globally after data showed Japan's economy contracted in the second quarter. [ID:nT110289]

These concerns are coming as global lenders warn about more potential woes from U.S. mortgage-related investments, including those firms previously thought to have been less vulnerable.

JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) said on Tuesday it has racked up $1.5 billion of losses so far this quarter on these assets, while some analysts cut earnings estimates for Goldman Sachs (GS.N: Quote, Profile, Research) citing capital market pressures. [ID:nBNG274174] and [ID:nBNG283432]

Trading was largely quiet in Asian credit, however, though some investors used the chance to pick up bonds that have taken a hit recently.

Philippines' cash bonds -- among the most widely traded in the region outside Japan -- gained about one-eighth to one-quarter of a point, according to a Manila-based trader.