RPT-GLOBAL MARKETS-Asia stocks stumble on slowdown fears

(Repeats to a wider audience, with no changes to text)

* MSCI Asia-ex Japan share index hits 17-month low

* Oil set to snap 3-day decline, trading above $113

* Japan's economy shrinks by 0.6 percent in Q2 (Updates prices, adds European outlook)

By Kevin Plumberg

HONG KONG, Aug 13 (Reuters) - Asian stocks dropped on Wednesday, with shares outside Japan falling to a 17-month low, on the growing risk of a sharp global slowdown, while the U.S. dollar held near six-month highs against major currencies.

Crude oil prices staged a small rebound to above $113 a barrel, set to snap a three-day decline. Oil prices have dropped 23 percent from a record above $147 a month ago.

European stock markets were expected to open as much as 0.5 percent lower, according to financial bookmakers, as investors feared what started as an economic slowdown centered in the United States has become much more global.

Data showing Japan's gross domestic product contracted in the second quarter added to a sense of unease about growth prospects and reinforced concerns that the world's second-largest economy may have slipped into a recession. [ID:nT66849]

Also, credit woes showed no signs of ending after a year, with JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), the No.3 U.S. bank, saying on Tuesday it chalked up $1.5 billion in losses so far this quarter on mortgage-related assets.

That weighed on U.S. shares overnight.

"Fresh credit worries and the subsequent share falls on Wall Street are weighing on sentiment," said Hwang Geum-dan, a market analyst at Samsung Securities in Seoul. "Despite oil's falls, investors remain cautious as concerns about fundamentals such as economies and corporate earnings pervade the markets."

Japan's Nikkei share average .N225 closed down 2.1 percent, led lower for a second day by shares of clothing company Fast Retailing (9983.T: Quote, Profile, Research, Stock Buzz).

Japan's economy shrank 0.6 percent on a quarterly basis, as expected, ending the longest period of expansion since World War Two. Economics Minister Kaoru Yosano said the economy could shrink further but a contraction would not last long.

Stocks elsewhere in Asia-Pacific .MIAPJ0000PUS slid to the lowest since March 2007, according to an MSCI index. The gauge has fallen 32 percent from a life high last November.

Hong Kong's Hang Seng index .HSI fell 0.7 percent to the lowest in a month, dragged down by shares of China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz), which hit their lowest in almost a year on worries the company's bottom line is vulnerable to slower growth.

Slowing growth was a major concern for mainland China investors, with the Shanghai composite index .SSEC falling to a fresh 19-month low. China's is the worst performing major benchmark stock index this year, down 54 percent.

KEEP WATCHING OIL

Crude prices and the U.S. dollar continued to trade close together, with a decline in one coinciding with a rise in the other.

Analysts say one of the biggest uncertainties as to whether the dollar's 10 percent rise against the euro since mid-July is sustainable is whether oil prices will start climbing again.

"We remain wary of any rebound in oil and commodity prices as it could trigger a partial reversal of recent moves," said Brian Kim, currency strategist with UBS in Stamford, Connecticut.

"Although markets have moved quickly, we expect further consolidation of new ranges up ahead and shift our euro/dollar forecasts to $1.51 and $1.47 for 1 month and 3 months, respectively," he said in a note.

The euro rose 0.3 percent to $1.4942 , after hitting its lowest since February around $1.48 on Tuesday. Against the yen, the dollar fell 0.4 percent to 108.73 yen , moving further away from a 7-month high above 110 yen hit on Monday.

In a sign that investors, particularly in Japan, were losing their willingness to take risks for a higher return, both the New Zealand and Australian dollars fell sharply against the yen.

The September U.S. light crude contract edged up to $113.35 a barrel CLc1, off Tuesday's three-month low of $112.31.

Despite crude's small comeback, there are growing signs of a significant drop in energy demand from the world's top consumers of oil.

U.S. crude demand in the first half fell by the most since 1982, a government report showed. That data followed a report on Monday that said July crude imports by China fell by a surprising 7 percent to a seven-month low.