* Japan bank shares sag on Nomura $5.6 bln share offering
* Dollar up, sterling under pressure
* Reduced stimulus measures could hit risk taking
By Kevin Plumberg
HONG KONG, Sept 25 (Reuters) - Asian stocks fell and the U.S. dollar extended gains on Friday after central banks said they were winding down extraordinary stimulus measures, raising fears the days of fast flowing liquidity were numbered.
Japan's Nikkei share average led declining equity markets in Asia, falling 2.9 percent.
Bank shares dropped after Nomura Holdings said it would raise in an equity offering up to $5.6 billion, what one broker pointed out was 24 times its average daily turnover.
The first inflows to money market funds in eight weeks, pronouncements from the Chinese that the world needs to begin preparing stimulus exit strategies and comments from a Federal Reserve official that rates may need to rise have contributed to profit taking in equities and bets against the dollar.
While the overall level of liquidity in most economies is abundant, the prospect of reduced stimulus sent some dealers to lock in profits ahead of the outcome of a G20 meeting in Pittsburgh, in which rebalancing the global economy was a focus.
"Markets are fragile at the moment and there was a visible announcement effect -- markets afraid that as liquidity is mopped up, then some risk appetite may go with it," said Adam Carr, senior economist at ICAP Australia.
SHARES BROADLY DOWN
The MSCI index of Asia Pacific shares outside Japan slipped 0.9 percent after touching a 13-month high on Wednesday. The materials and IT sectors were the hardest hit while the energy and telecom sectors outperformed.
A Thomson Reuters index of regional shares was down 0.8 percent.
The MSCI all-country world index is down 1.9 percent so far this week, on track for the biggest weekly decline since the week of July 12. The index is up 25 percent year-to-date, but the likelihood that economic news will continue to deliver positive surprises and trigger more buying was smaller.
"Our trading stance remains 'pro-risk,' reflecting our view that this pullback -- like those before it -- will likely be temporary," said Dominic Wilson, director of global macro and markets research with Goldman Sachs, in a note.
"But industrial news is undershooting a bit lately relative to high expectations and it is less clear what will take the market higher in the very near-term."
Despite an eight-week streak of outflows from safe haven money market funds being broken, equity funds took in $5.42 billion in the week to Sept. 23, with emerging market equity funds having their biggest week of inflows since early June, fund tracker EPFR Global said in a note.
In currency markets, the dollar was up against most major currencies except the yen. The euro was down 0.1 percent to $1.4640 after climbing to the highest in a year above $1.48 on Wednesday.
Sterling continued to be an open target after Bank of England's Mervyn King said on Thursday that a weak currency was helping the domestic economy. After dropping 1.8 percent on Thursday, the pound fell a further 0.8 percent to $1.5943.
U.S. Treasuries were steady after a rush out of equities on Thursday weighed on yields. Japanese government bonds gained after the overnight Treasuries rally, with the December 10-year JGB future up 0.25 point after earlier hitting the highest since Sept 15.
U.S. crude futures recovered after tumbling over 4 percent to an eight-week low the previous day when weak U.S. home sales increased fears about the pace of economic recovery in the world's top oil consumer nation.
U.S. crude for November delivery was up 0.7 percent at $66.34 a barrel, after settling down $3.08 on Thursday, when the housing data added to demand worries following a report earlier in the week of a large build in oil stockpiles.
(Additional reporting by Wayne Cole in SYDNEY; Editing by Jeremy Laurence)