By Rafael Nam and Nina Mehra
HONG KONG, Jan 7 (Reuters) - Asian stocks slumped to a
two-week low on Monday, extending a poor start in 2008, after
weak U.S. jobs data heightened fears of recession in the
region's top export market, while bond prices rose as investors
sought safety.
Oil prices -- which hit a record above $100 barrel just
last week -- fell on concern global demand would suffer from a
U.S.-led slowdown, but the dollar edged higher from a six-week
low on Friday as some saw the currency as oversold.
"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."
MSCI's measure of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> lost 2.3 percent by 0618 GMT. Earlier, the
index hit its lowest since Dec. 21.
The index has dropped 3.3 percent this year, weighed down
by concerns about the world's top economy.
European stocks are also forecast to fall on Monday
according to financial bookmakers, with Britain's FTSE 100
<> seen down between 10 to 18 points and the German DAX
<> expected 27 to 33 points lower.
Tokyo shares <> dropped to a 17-month low at one
point, ending down 1.3 percent, after slumping 4 percent on
Friday, their first trading day of the year.
Taiwan stocks <.TW> shed 4.1 percent, while other markets
such as Australia <>, Hong Kong <> and Singapore
<> were down more than 2 percent each.
Exporters such as South Korean auto maker Hyundai Motor Co
<005380.KS> were hit hard after 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.
[]
Chip-related shares were also among the day's biggest
decliners, extending recent falls following downgrades of the
sector by a couple of U.S. brokerages last week.
Japanese microchip equipment maker Tokyo Electron <8035.T>
fell 2.8 percent, while South Korea's Samsung Electronics Co
Ltd <005930.KS> was down 3.7 percent. Taiwan's TSMC <2330.TW>,
the world's biggest contract chip maker, dropped 7 percent.
But bucking the trend, Chinese infrastructure-related
stocks rallied following news of contracts won in the sector,
with China Railway Group <0390.HK> up 3 percent.
[]
DOLLAR REBOUNDS
Commodity-related shares, such as miners BHP Billiton
<BHP.AX> and Fortescue Metals <FMG.AX>, also fell on concerns a
slowdown in global demand growth would dent a recent boom in
prices for resources such as oil and metals.
U.S. crude futures <CLc1> retreated 61 cents to $97.30 a
barrel, while London Brent crude <LCOc1> eased to $96.31.
The dollar edged up to around 108.9 against the yen from a
six-week low hit on Friday, but remained steady against the
euro <EUR=>.
"The market is still adjusting its view of how a U.S.
slowdown is going to affect Asia," said Gerrard Katz, head of
North Asia currency trading at Standard Chartered in Hong Kong.
"As long as Asian stocks are weak, fund managers are buying
U.S. Treasuries and selling positions in a traditional
safe-haven play."
SAFE HAVEN
Japanese government March bond futures <2JGBv1> hit a
one-month high on Monday as fears of a U.S. recession grew and
investors bet the Fed will cut interest rates by at least 25
basis points during its Jan 29-30 meeting.
U.S. short-term interest rate futures jumped on Friday,
pricing in as much as a 70 percent chance that the Fed would
cut rates by 50 basis points <FFG8>. []
The Fed has lowered its benchmark lending rate by 100 basis
points since September to 4.25 percent.
Spot gold <XAU=> edged down to $855.80/$856.60 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.
