GLOBAL MARKETS-Asian shares edge higher, capped by growth, earnings worries

* MSCI Asia ex-Japan inches up, Nikkei opens down 0.5 pct

* Euro, Aussie steady off lows

* IMF cuts global growth forecast, warns U.S., Europepolicymakers

By Chikako Mogi

TOKYO, Oct 9 (Reuters) - Asian shares edged higher onTuesday but were capped by concerns over global growthprospects, especially in the world's second-biggest economyChina, and expected weak U.S. corporate earnings.

The International Monetary Fund cut its global growthforecast on Tuesday to a 3.3 percent expansion for 2012, downfrom its July estimate of 3.5 percent, making it the slowestyear of growth since 2009. It warned U.S. and Europeanpolicymakers that failure to fix their economic ills wouldprolong the slump.

The IMF also said on Tuesday China's economic growth isexpected to weaken to 7.8 percent this year, warning of risks toemerging Asia if the euro zone crisis worsens and the UnitedStates does not avoid its "fiscal cliff".

The IMF's World Economic Outlook preceded its twice-yearlymeeting scheduled in Tokyo later this week, and followed asimilarly grim report from the World Bank, which on Monday cutforecasts for the East Asia and Pacific region. It said theslowdown in China could worsen and last longer than expected.

Global shares and oil fell on Monday on the report.

U.S. equities fell on Monday ahead of corporate earningsreporting season which starts Tuesday, as analysts forecastthird-quarter earnings to fall for the first time in threeyears.

The MSCI index of Asia-Pacific shares outside Japan

was up 0.1 percent, Australian shares

added 0.3 percent and South Korean shares

were up 0.1percent.

However, Tokyo's Nikkei stock average

opened down0.5 percent, resuming trading after a holiday on Monday.

"People are basically waiting for the U.S. earnings to seejust what kind of impact the general slowdown, particularly inChina, has had on companies' earnings," said Toshiyuki Kanayama,senior market analyst at Monex.

U.S. crude oil futures

were up 0.7 percent to $89.95a barrel and Brent

was up 0.5 percent to $112.39.


Euro zone debt crisis:Chinese vs U.S. equities:

HIGHLIGHTS from Eurogroup meeting:

IMF forecasts:


The euro

traded at $1.2975, off its two-week peak of$1.3072 reached on Friday. The risk-sensitive andcommodity-related Australian dollar

inched up 0.3percent to $1.0211, after hitting a three-month low of $1.0149on Monday.

Uncertainty over whether Spain will request external aid tohelp streamline its huge public debt remained after euro zonefinance ministers met on Monday to discuss issues related to theregion's debt crisis, including what needs to be done toestablish a single supervisory authority for euro zone banks.

The Eurogroup finance ministers launched their permanent 500billion euro bailout fund on Monday but said Spain, the countrywidely expected to be first to draw on it, was taking steps tooverhaul its economy and did not need a bailout for now.

"Markets look as if they are tiring of the current stand offbetween Spain and Europe on the details of bailouts etc ... Thismay start to drag more on equity/commodity markets in thesessions ahead," Westpac Institutional Bank said in a researchnote. The European Central Bank's new programme to buy bonds ofstruggling euro zone states, aimed at reducing their borrowingcosts, is conditional on the countries asking for help.

Greece, which was the focus of market jitters before Spain,said international lenders are considering giving the countrytwo more years to reach its budget deficit reduction targets,and the extra time could be financed without more money from theeuro zone.

Investors, who have remained largely cautious about puttingmoney into riskier assets, have instead been buyinghigher-yielding credit products with growth prospects.

The Philippines, despite its junk bond rating, was likely todraw foreign investors when Asia's largest issuer of sovereigndebt in the global market is set to return this month with a $1billion global peso note offer.

Asian credit markets were softer early on Tuesday, with thespread on the iTraxx Asia ex-Japan investment-grade index

wider by 2 basis points.

(Additional reporting by Sophie Knight in Tokyo; Editing byMichael Perry)

((chikako.mogi@thomsonreuters.com)(+813 6441 1871 ReutersMessaging: chikako.mogi.thomsonreuters.com@reuters.net))

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