By Rafael Nam
HONG KONG, Jan 7 (Reuters) - Asian stocks slumped to a
two-week low on Monday, extending a weak start to 2008, while
the dollar hovered near multi-week lows after weak U.S. jobs
data heightened fears of recession in the region's top export
market.
Bond prices rallied on expectations that the Federal
Reserve will cut interest rates later this month to try to
revive growth, while oil prices -- which hit a record above
$100 barrel just last week -- fell as investors feared demand
would suffer from a U.S.-led slowdown in global economic
growth.
MSCI's measure of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> lost 2.2 percent by 0309 GMT. Earlier, the
index hit its lowest since Dec. 21.
The index has dropped more than 3 percent this year,
weighed down by concerns about the world's top economy.
"The sluggish jobs data is reinforcing concerns that the
subprime mortgage crisis is pushing the U.S. economy towards a
recession," said Kim Young-gak, an analyst at Hyundai
Securities.
"Now it looks like the U.S. Federal Reserve will almost
certainly cut interest rates by at least a quarter percentage
point this month."
Tokyo shares <> dropped 1 percent after slumping 4
percent on Friday, their first trading day of the year.
Taiwan stocks <.TW> slumped 3 percent, while other markets
such as Australia <>, Hong Kong <> and Singapore
<> were down more than 2 percent each.
Exporters were hit hard, particularly chip makers following
downgrades of the sector by a couple of U.S. brokerages last
week.
Microchip equipment maker Tokyo Electron <8035.T> fell 3
percent, while chip maker Samsung Electronics Co Ltd
<005930.KS>, of South Korea, was down 3.3 percent. Taiwan's
TSMC <2330.TW>, the world's biggest contract chip maker,
dropped 6.3 percent
The U.S. non-farm payrolls figures showed U.S. job growth
skidded to a near-halt in December and unemployment rose to a
two-year high. []
The dollar weakened on Friday, undermining the earnings
prospects for Asia's exporters.
The currency steadied in Asia on Monday, having hit a
six-week low of 107.90 on Friday and it stayed near a five-week
low against the euro <EUR=>.
Commodity-related shares, such as BHP Billiton <BHP.AX>,
which had benefitted last year from soaring prices in metals
and oil, also fell on concerns about a slowdown in global
demand growth.
U.S. crude futures <CLc1> retreated 59 cents to $97.32 a
barrel, while London Brent crude <LCOc1> eased to $96.24
"Concerns about the U.S. economy are clearly putting some
pressure on oil prices. Some market players are also using this
opportunity to take profits," said Gerard Burg, a resource
analyst from the National Bank of Australia.
SAFE HAVEN
With fears of a U.S. recession growing, investors continued
a trend this year of switching to so-called safe-haven assets,
such as government bonds.
Japanese government March bond futures <2JGBv1> hit a
one-month high on Monday.
U.S. short-term interest rate futures jumped on Friday,
pricing in as much as a 70 percent chance that the Fed will cut
rates by 50 basis points <FFG8> when it meets to review policy
on Jan 29-30. []
The Fed has lowered its benchmark lending rate by 100 basis
points since September to 4.25 percent.
Spot gold <XAU=> edged down to $857.10/$857.90 as energy
prices fell, but stayed within reach of a record high of
$869.05 traded last week, as a weak dollar makes the precious
metal cheaper in other currencies.
