Asian shares wither as OPEC's restraint hits oil

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TOKYO (Nov 28): Oil prices, oil-related shares and oil-linked currencies all tumbled in Asia on Friday, in the wake of OPEC's decision to refrain from cutting output despite a huge oversupply.

U.S. markets were closed on Thursday for the Thanksgiving holiday, leaving the spotlight on the Organization of Petroleum Exporting Countries' meeting in Vienna where Saudi Arabia blocked calls from poorer cartel members to cut production to stem a slide in global prices.

"OPEC is clearly signalling that it will no longer bear the burden of market adjustment alone and this decision puts the onus on other producers," Barclays analysts said in a note.

Crude prices had been under pressure ahead of the meeting, but the sharp dive afterward - the largest since 2011 - showed the decision was not fully priced in.

Brent crude stood at $72.60 a barrel after settling at a four-year closing low on Thursday, poised to fall more than 15 percent for its steepest monthly decline since November 2008. U.S. crude was last down 6.5 percent at $68.93.

MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.7 percent, on track for a weekly gain of nearly 1 percent but a monthly loss of about 1.6 percent.

Australian shares dropped 1.6 percent as energy companies took a hammering, with Sundance Energy, Drillsearch, Santos Ltd falling 10-16 percent.

The Nikkei stock average bucked the regional downtrend and added 0.9 percent, on track for a slight weekly gain and a hefty monthly gain of over 6 percent.

Japanese data out earlier on Friday showed Japan's industrial output unexpectedly rose 0.2 percent in October, marking a second straight month of gains, the jobless rate fell and the availability of jobs edged higher.

But Japan's annual core consumer inflation slowed for a third straight month in October due to falling oil prices.

"Japan is amidst a perfect positive storm," said Stefan Worrall, director of equities cash sales at Credit Suisse.

"The oil price decline is stimulatory to world demand for Japanese exports, and offsets the impact of the weak yen on domestic energy costs."

Two-year Japanese government bonds traded at a negative yield for the first time in history on Friday, as the Bank of Japan's massive bond buying quest to vanquish deflation crushed short-term debt yields.

The dollar rose about 0.4 percent against the yen to 118.20 yen, while the euro drifted down about 0.1 percent to $1.2455.

But the greenback made dramatic moves against the currencies of oil-rich countries. The dollar rallied to 6.9570 Norwegian crowns, a high not seen in over five years, and was last at 6.9463.

The U.S. dollar spiked to a one-week high against its Canadian counterpart at C1.1355, before steadying at C$1.1335 in Asia.

Spot gold extended losses into a third session on expectations that plunging oil prices could sap inflationary pressure and curb the metal's appeal as a hedge. Gold was down 0.5 percent at $1,184.80 an ounce, down about 1 percent for the week and ready to snap a three-week rally.

On Thursday, the euro fell against the dollar, after data showed German inflation sinking to its lowest since February 2010, reinforcing bets the European Central Bank will ease monetary policy more aggressively.

The European Commission will tell France, Italy and Belgium on Friday their 2015 budgets risk breaking EU rules, but it will defer decisions on any action until early March, when France could face a multi-billion euro fine and Italy and Belgium be put on a disciplinary programme.

According to draft documents seen by Reuters, Spain, Portugal, Austria, and Malta are also at risk of busting budget limits.