11:24 PM
By Saikat Chatterjee
HONG KONG | Fri Feb 11, 2011 1:16am EST
HONG KONG (Reuters) - Asian stocks fell more than a percent and were on course for their biggest weekly loss in nine months as investors shunned risk on concerns about the pace of policy tightening in the region and growing tensions in Egypt.
A broad sell-off in Asia since the start of 2011 on inflationary worries has shown no signs of abating, as expectations of more monetary tightening have encouraged investors to shift funds from emerging to developed markets.
Analysts said the selling in emerging markets could have some more room to run, especially in countries where stocks are ripe for a pullback after last year's stellar gains and the near term interest rate outlook is unclear.
On Friday, Taiwan .TWII shares ended down more than two percent, stock markets in Thailand .SETI and Korea were down one percent, while Australia's benchmark index .AXJO snapped a seven-day winning streak a investors took profits from banking and resource shares.
MSCI's index of Asia Pacific shares-ex-Japan .MIAPJ0000PUS is set to fall by more than 4 percent this week, its worst performance since May 2010.
So far this year, Asian shares have underperformed the MSCI world index .MIWD00000PUS by five points as traders cut positions due to a steady drip of strong data out of the U.S.
"Pressure on emerging market equities may well, therefore, continue while uncertainties about the intensity, duration and effect of the ongoing tightening cycle remain alive," Barclays strategists said in a weekly note.
This week alone, China raised interest rates, Philippines held rates but raised its inflation forecast and Bank of Korea surprised markets by holding rates steady, although it is widely expected to tighten again in March.
Foreign selling has picked up in Asian shares, especially in South Korea this week while offshore selling in Taiwan on Thursday was the biggest in six months.
Indonesian shares .JKSE fell 0.6 percent with shares in PT Garuda Indonesia GIAA.JK, the nation's state-owned carrier, tanking by more than 20 percent on debut.
Japanese markets were closed for a national holiday.
METALS GAIN
Copper rose back above $10,000 per tonne, while tin prices hit a record high as strong U.S. jobless data reassured investors about the pace of the recovery in the world's biggest economy.
Egyptian President Hosni Mubarak's plans to relinquish powers but not step down did little to boost investor hopes of a quick solution to the Egyptian crisis and lifted oil prices.
Gold, was steady at around $1,364 an ounce and U.S. crude oil futures rose 88 cents to $87.61 a barrel.
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