Asian shares hit 1-week lows on renewed virus scare, inflation worry

 Japan's Nikkei dropped 1.3% as did Australia's benchmark share index. South Korea's KOSPI was 1% lower

By Swati Pandey

SYDNEY (Reuters) - Asian shares slipped to a one-week low on Monday and perceived safe-haven assets, including the yen and gold, edged higher amid fears of rising inflation and a surge in coronavirus cases, while oil prices fell on oversupply worries.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1% for a second straight day of losses to 677.45, a level not seen since July 12. The index was on track for its biggest daily percentage drop since July 8.

Japan's Nikkei dropped 1.3% as did Australia's benchmark share index. South Korea's KOSPI was 1% lower, while Chinese stocks also started on the backfoot with the blue-chip index down 0.6%.

Oil prices tumbled more than 1% after an agreement over the weekend within the OPEC+ group of producers to boost output at a time when the outlook for demand is still cloudy. [O/R]

Global economic growth is beginning to show signs of fatigue while many countries, particularly in Asia, are struggling to curb the highly contagious Delta variant of the coronavirus and have been forced into some form of lockdown. The specter of elevated inflation, which the market has long feared, is also haunting investors.

Economists at Bank of America downgraded their forecast for U.S. economic growth to 6.5% this year, from 7% previously, but maintained their 5.5% forecast for next year.