August 23, 2018 / 6:41 AM / a month ago

GLOBAL MARKETS-Asian shares fall on Trump woes, U.S.-China tariffs kick in

(Recasts, updates prices)

* MSCI ex-Japan off 0.2 percent, Aussie shares tad softer

* Australian dollar skids 0.8 pct on political uncertainty

* Deadline for fresh U.S.-China tariffs on Thursday

* Trump threatened by legal woes of two former advisers

By Swati Pandey

SYDNEY, Aug 23 (Reuters) - Asian shares slipped on Thursday amid speculation U.S. President Donald Trump's political position could be threatened by the legal woes of two former advisers and as fresh U.S.-China tariffs took effect.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent. Hong Kong's Hang Seng index stumbled 0.6 percent while Chinese shares see-sawed between positive and negative territory. The blue-chip index was last up 0.4 percent.

Spreadbetters pointed to a subdued start for European shares with FTSE futures off 0.2 percent. E-Minis for the S&P500 were a shade softer too.

While investors are looking ahead to see how increasing trade barriers between China and the United States might affect corporate earnings, political turmoil remained a focus for financial markets on Thursday.

A major overhang remains the fallout from criminal probes against Trump's former personal lawyer Michael Cohen and ex-campaign chairman Paul Manafort. Investors are considering whether the setback would hurt the Republican Party's election prospects.

The investigations weighed on Wall Street overnight which ended mixed despite the S&P500 clocking its longest bull run in history.

Trump was not charged and Cohen's plea deal does not mean the president has been implicated in anything, press secretary Sarah Sanders said at a White House briefing.

"While the (legal issues) shouldn't substantially alter the stock market landscape, money managers and analysts say the developments raise the likelihood of further turbulence ahead for Mr. Trump heading into the mid-term elections," said James McGlew, Perth-based analyst at stockbroking firm Argonaut.

"And that uncertainty would likely weigh on the minds of investors."

The political tensions were not limited to the United States though.

Australian shares slipped 0.3 percent, falling victim to political uncertainties surrounding Prime Minister Malcolm Turnbull after several senior ministers tendered their resignations on Thursday and demanded a second leadership vote.

The turmoil also hit the Australian dollar, which became the worst performing major currency on Thursday. It was last down 0.8 percent for its second straight day of decline.

Elsewhere, Japan's Nikkei added 0.2 percent while Indian shares lost their puff after climbing to a record-high.

Another focus for investors will be manufacturing data from Europe and the United States later in the day as investors gauge whether the spectre of a global trade war is hurting economic activity.

A survey on Thursday showed Japanese manufacturing activity grew at a slightly faster pace in August although export orders contracted, adding to worries about rising trade protectionism.

CLASH OF TITANS

The United States and China implemented 25 percent tariffs on $16 billion worth of each other's goods on Thursday.

The latest round brings to $50 billion the value of imports subjected to tariffs on either side since early July, and more are in the pipeline, adding to risks for global economic growth.

In its research titled "Storm Squalls", Citi said that divergence in the various trade disputes between the United States and its trading partners is likely to be a key driver for markets.

"Trade tensions have narrowed to U.S. vs China; however, there is no such thing as a bilateral trade war," it added.

"Despite recent signs that trade talks are resuming, we expect U.S.-China trade tensions to continue."

The dollar index, which measures the greenback against a basket of major currencies, added 0.3 percent to 95.415 after six straight sessions of losses took it to the lowest in three weeks.

The euro was last off 0.3 percent at $1.1553, not far from Wednesday's two-week high of $1.1623 touched on Wednesday. The Japanese yen weakened 0.3 percent to 110.85 per dollar.

In commodities, Brent crude, the international benchmark, eased 16 cents to $75.60 while U.S. crude gained 1 cent to $67.87.

U.S. gold futures for December delivery fell 0.5 percent while spot gold dipped 0.3 percent to $1,191.0 an ounce.

Reporting by Swati Pandey; Editing by Sam Holmes

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