Asia stocks dip on stagflation lingers

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Hong Kong, July 1: : Nomura chief Asia strategist Sean Darby at a briefing in New York.

"Equities will probably be back to some of the lows we've seen in the last 10 years, but there won't be much financial distress, because the balance sheets are pretty good," said Darby, who is bullish on Korea, Malaysia, Thailand and Hong Kong, and would look to acquire Taiwan and Australia toward the end of the third quarter.

The bond market entered the second half on a down note after a volatile past few months, in which the benchmark 10-year Japanese government bond yield declined around 20 basis points in the last two weeks.

The yield , which moves inversely to the price, rose 6 basis points to 1.650 per cent on news that the June tankan's headline figure for big manufacturers was higher than the median market forecast. It touched a seven-week low of 1.585 per cent on Monday.

South Korean government bond yields also rose after the country's central bank raised its inflation forecast.

The US dollar rebounded slightly after slipping to a three-week low against the euro on Monday.

The euro was down 0.1 per cent at $1.5740 ahead of a widely expected interest rate rise by the European Central Bank on Thursday. The dollar was up 0.15 per cent at 106.25 yen .