* Japan joins euro zone, HK, Singapore in recession club
* Choppy trade reflects uncertainty and thin volume
* Oil down near 22-month low on demand fears
(Repeats to additional subscribers with no change to text)
(Updates prices, adds European outlook)
By Kevin Plumberg
HONG KONG, Nov 17 (Reuters) - Asian stocks slipped on
Monday in choppy trade, despite some buying of Japanese shares
by long-term investors, on expectations corporate results will
reflect deteriorating economic conditions until at least the
second half of 2009.
Major European stock markets were expected to open as much
as 1 percent lower, according financial bookmakers, while U.S.
stock market futures were slightly higher after a sharp
sell-off on Friday.
Oil prices dipped to within striking distance of last
week's 22-month low after policymakers from both emerging and
developed economies who met in Washington chose to leave
individual governments to tend their own backyards and did not
propose a global response. []
Many economies were buckling under the worst financial
crisis in a generation, with a report on Monday confirming that
Japan has joined a growing list of economies sliding into
recessions. []
Despite mostly sound fundamentals, markets are essentially
pricing in a re-run of the 1997-1998 Asian financial crisis,
worried about the region's reliance on export-driven growth and
trade financing.
"This means that export-dependent Asia is facing a double
whammy just at the wrong time: an already weakened external
demand is being constricted by tight credit conditions," United
Overseas Bank economists said in a note.
"If history repeats, this would suggest that Asia should
see a fairly challenging first half of 2009 as the momentum of
declines gathers speed," they said.
The MSCI index of Asia-Pacific stocks outside of Japan
<.MIAPJ0000PUS> fell 1.75 percent, extending last week's 9.7
drop. Year-to-date losses have piled up to around 57 percent.
Hong Kong's Hang Seng index <> was little changed in
choppy trade, with shares of Hong Kong Exchanges & Clearing
<0388.HK> one of the biggest percentage losers as investors
expected withering volumes to hurt the company's bottom line
more.
Airline stocks such as Air China <601111.SS><0753.HK>,
China Eastern Airlines <600115.SS><0670.HK> and China Southern
Airlines <600029.SS><1055.HK> rallied on hopes they will get
government cash injections to cope with high costs and weak
demand. []
Tokyo's Nikkei share average <> recovered from early
losses, edging up 0.7 percent, as the yen fell and as public
pension fund managers snapped up cheap stocks. Some of the
stocks lifting the index, such as Takeda Pharmaceutical
<4502.T>, were so-called defensive plays, which were expected
to perform relatively well in a slowdown.
STOCKS CHEAP BUT DEMAND THIN
Many analysts were not predicting a near-term improvement
in market sentiment. Financial markets and economies remained
locked in a vicious circle, with weakness in one affecting the
other.
Equity capital flows into developed markets over the last
month were at near record lows, according to State Street
Global Markets analysts. Savage selling in global stock markets
has made prices very cheap but investors have not judged the
coast clear enough to buy wholesale yet.
"State Streets analysis of the long-run price-earnings
multiple suggests valuations are now at levels only seen in
extreme periods of dislocation such as the hyperinflationary
1970s and World War Two. However, stocks can stay cheap if
there is no demand to buy them," the analysts said in a note.
The yen fell against the euro and the U.S. dollar after a
report showed Japan's gross domestic product shrank by 0.1
percent in the July-to-September period and government
officials said the situation could worsen further.
However, with the process of widespread risk reduction
still very much intact, dealers did not expect the yen to stay
down for long.
The U.S. dollar was nearly flat at 96.96 yen <JPY=> after
solid gains earlier in the day, and the euro fell 0.3 percent
to 121.90 yen <EURJPY=>.
U.S. Treasuries pared earlier gains as equity markets
rebounded and U.S. stock futures flipped to positive on the
day. The benchmark 10-year note was unchanged, with a yield of
3.73 percent <US10YT=RR>.
U.S. light crude for December delivery <CLc1> fell about $1
to $56.06 a barrel, near the $54.67 a barrel low it hit on
Thursday, its weakest since January 2007.
"G20 leaders may have urged fast action to deal with the
global financial crisis, but concern over the weakened
international economic outlook still weighs heavily," said
David Moore, a commodities strategist at the Commonwealth Bank
of Australia.
The Group of 20 world leaders agreed Saturday to a raft of
fiscal and monetary steps to rescue the global economy, but it
was left to individual governments to tailor their response to
their particular circumstances.
(Additional reporting by Fayen Wong in PERTH and Fang Yan in
SHANGHAI; Editing by Lincoln Feast)
