* Yen rises to fresh 18-month high against dollar
* Australian shares slip after lacklustre China survey
* Crude oil futures give back some gains after winning week
By Patrick Graham
LONDON, May 2 (Reuters) - A 3 percent plunge in the Tokyo
stock exchange and falls in European banking shares added to a
gloomy global financial mood on Monday, pushing oil prices lower
and the dollar to an 18-month low against the yen.
With trading thinned out by holidays in London and many
Asian economies, a solid read of manufacturing sentiment in
Germany drove the Frankfurt stock exchange around 1 percent
higher. .GDAXI
That also helped France's CAC 40 .FCHI gain almost half a
percent. But elsewhere the picture showed more of the concern
over banking, poor economic growth and over-inflated asset
prices that has gripped financial markets for much of this year.
Brent crude fell more than 1 percent LCOc1 to $46.78 a
barrel while the European banking index .SX7E lost 0.6
percent. MSCI's broadest index of Asia-Pacific shares outside
Japan .MIAPJ0000PUS was down 0.3 percent.
The yen, which tends to gain when Japanese and global market
investors get worried about growth, reached 106.14 yen per
dollar in early Asian trade before steadying on the day.
Last week was the yen's best since the 2008 financial
crisis, thanks largely to a Bank of Japan policy meeting that
gave no hint of further efforts to stimulate a long-moribund
economy with more outright money-printing.
"A lot of people are still talking about Japan," said Thu
Lan Nguyen, a strategist with Germany's Commerzbank (DE:CBKG).
"The BOJ are creating the impression that they will always
react too late to deflationary risks. Now that they have
disappointed, I think it would take something really new to
change the market's mind on the yen."
Adding to the subdued sentiment, a survey released on Sunday
showed that activity in China's manufacturing sector expanded
for the second month in a row in April but only marginally,
raising doubts about the sustainability of a recent pick-up in
the economy.
Australian shares .AXJO fell 0.2 percent after
disappointing results from Westpac Banking Corp WBC.AX .
Australia's central bank board will meet for a policy review
on Tuesday and is widely expected to keep its cash rate at a
record low of 2.0 percent, though some economists expect a cut.
Markets in Hong Kong, China, Taiwan, Singapore and Malaysia
were closed on Monday. Japan is in the middle of its Golden Week
series of holidays and markets there will be closed on Tuesday,
Wednesday and Thursday of this week.
Investors have also turned broadly negative on the dollar in
the past two months, worried that the U.S. Federal Reserve will
be unable to raise interest rates this year. A fall to a 6-1/2
month low of $1.1484 against the euro EUR= bode ill for the
run-in to payrolls data on Friday. The dollar index of its
strength against a basket of six rival currencies, fell 0.2
percent to 92.899 .DXY .
"The start of the new month does not mean a new trend. The
technical tone of the dollar is weak," Marc Chandler, global
head of currency strategy at Brown Brothers Harriman in New
York, said in a note to clients.
"The Federal Reserve acknowledges the continued improvement
in the labour market. The problem is that it has not translated
to stronger consumption, and business investment remains soft."