* Asian stocks slump to lowest since May 2004
* Oil falls to 17-month low on global recession fears
* Threat of G7 intervention briefly pushes yen lower
* Japanese lenders plummet on fears of stock market losses
(Repeats to more subscribers)
By Rafael Nam
HONG KONG, Oct 27 (Reuters) - Japanese stocks tumbled to
26-year lows on Monday and most other Asian markets fell
heavily in chaotic trade as investors feared a flurry of
central bank moves would not be enough to stave off a global
recession.
Little that officials said could convince panicky investors
that governments can stem the fast-spreading crisis that is
menacing financial markets, economic growth and company
earnings.
The yen continued to gain even after Group of Seven finance
ministers on Monday singled out the excessive volatility of the
currency, which is battering Japanese share prices.
European shares were expected to open sharply lower with
losses of up to 2.3 percent, tracking weakness in Asia, while
oil prices extended falls to below $64 a barrel.
"The outlook in terms of growth and exports remains shaky,
so it's hard to make a case for any sustained EM (emerging
markets) rally for now," said Win Thin, a senior currency
strategist at Brown Brothers Harriman in an email to clients.
However, Thin noted that government actions may eventually
turn some of these markets around.
"We continue to believe that markets will reward those
countries that are acting proactively to avoid a deeper
economic slowdown," he also wrote.
Japan's Nikkei index <> swung wildly throughout the
session before ending down 6.4 percent at its lowest close
since 1982 as exporters such as Canon Inc <7751.T> slumped on
the stronger yen.
Japanese lenders also tumbled on concerns they will need to
raise billions of dollars to offset hefty losses on their stock
portfolios as the global equity market rout continues.
Mitsubishi UFJ Financial Group <8306.T> plunged 14.6 percent.
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> fell for a fourth consecutive session, losing
3.2 percent as of 0620 GMT to its lowest since May 2004.
The MSCI index has now lost 41 percent since Sept. 12,
right before the collapse of investment bank Lehman Brothers
set off heavy selling. The index is down over 60 percent for
the year.
Taiwan <>, Hong Kong <> and Shanghai <> fell
over 4 percent each, while stocks in India <> lost 3.8
percent. Trading was briefly halted in the Philippines after
the market <> fell 10 percent, though Singapore was closed
for a holiday.
South Korean shares <> posted a gain after seesawing
between positive and negative territory, with selling from
jittery investors offsetting a boost from an emergency rate cut
by the central bank. The KOSPI ended up 0.8 percent after
earlier dropping as much as 5 percent.
"Nobody can tell for sure where the support levels are or
where the bottom is," said Castor Pang, a strategist with Sun
Hung Kai Financial in Hong Kong. "The current bear market
trends point to continuous declines in the market as fund
managers unload their positions in the face of increased
redemptions."
POLICY FIREPOWER?
Japan pledged fresh measures on Monday to try to shield the
world's second-biggest economy from the financial crisis while
South Korea slashed interest rates and Australia's central bank
intervened for a second day to support its tumbling currency.
The actions by Asian policy makers come days ahead of a
widely expected interest rate cut of 50 basis points by the
U.S. Federal Reserve on Wednesday and the U.S. advance report
on third-quarter economic growth due on Thursday.
[]
Few expect the sinking global economy to recover quickly
despite moves by central banks to cut rates, or government
efforts that have so far included pledging about $4 trillion in
a bid to support banks and thaw frozen credit market.
Emerging markets have been hit especially hard in the
global sell-off. Several more countries are expected to turn
the International Monetary Fund after Ukraine on Sunday agreed
on a $16.5 billion loan package to ease the effects of the
financial crisis. []
"The length and depth of the slowdown we still don't know,
but the market is definitely pricing in a recession," said Toby
Hassall, chief analyst at Commodity Warrants Australia in
Sydney.
On Monday, the Group of Seven warned the surging yen posed
a threat to financial and economic stability, in the latest
coordinated effort by the world's richest nations to contain
the worst financial crisis in 80 years. []
Analysts said the G7 statement suggested authorities were
getting closer to the point where they would consider
intervention, possibly jointly, to stem the yen's recent surge.
Yet the yen <JPY=>, after initially slipping slightly on
the news, climbed towards a 13-year peak against the dollar hit
on Friday, and an all-time high versus the Australian dollar as
the Nikkei's average plunge overshadowed the G7 warning.
The yen has firmed as market players have rushed to unwind
carry trades built up over the last several years in which they
borrowed the yen to invest in higher-yielding, riskier assets.
The dollar dipped 1.2 percent from late U.S. trade last
week to 93.16 yen <JPY=>, pulling back after rising to near
94.50 yen after the G7 warning. The euro was down about 2
percent at 116.74 yen <EURJPY=R>, near a six-year low of 113.79
yen hit on Friday.
The Australian dollar hovered near record lows against the
yen and a 5-
