By Louise Heavens
SINGAPORE, Jan 21 (Reuters) - Stocks in Asia resumed their
decline on Monday, led by banks like Japan's Mizuho, while the
dollar hovered near a 3-year low against the yen after a
proposed U.S. stimulus package did little to soothe fears the
world's top economy will tip into a recession.
Stock markets in Japan, South Korea and Australia nursed
losses of between 1.3 and 3 percent, dragged lower by banks and
financial companies as the sector continues to suffer the worst
fallout of the U.S. subprime mortgage crisis.
Demand for government bonds kept Japan's bonds firm as
investors sought a safe haven in the face of deteriorating
economies and slumping stocks.
March 10-year futures <2JGBv1> hit a 2-year high with a
0.29 point to 138.41. The five-year yield <JP5YTN=JBTC> fell 2
basis points to 0.835 percent, the lowest since January 2006.
Last week President George W. Bush called for package of
tax cuts and other measures of around $140 billion to $150
billion to shore up the U.S. economy, battered by the subprime
mortgage crisis and subsequent credit crunch. []
But the move did little to shore up sentiment in stock
markets.
"It's clear that investors are still very cautious," said
Craig James, chief equities economist with Commsec in
Australia. "We'd have to see some strength in Asia today to
turn this situationaround.
Tokyo's benchmark Nikkei <> was down 3 percent by 0133
GMT. The index has shed a quarter of its value since July, when
concerns that the U.S. subprime mortgage crisis would permeate
global financial markets first reared their head. Banks
extended recent losses on fears they will reveal more
credit-realted losses, with Mizuho Financial Group <8411.T>
down around 2 percent.
In Seoul worries over the health of the United States -- a
top export market -- hit stocks like flat screen maker
LG.Philips LCD Co Ltd <034220.KS>. The benchmark Korea
Composite Stock Price Index <> was down 1.3 percent.
Australia's S&P/ASX 200 index <> fell 2 percent.
MSCI's broadest index of shares outside of Japan
<.MIAPJ0000PUS> was down 0.9 percent by 0113 GMT. The index has
shed only around 3 percent since July as some investors
reckoned emerging markets would emerge from the credit crisis
relatively unscathed.
MSCI's All Country index <.MIWD00000PUS> has lost 12
percent in the same period.
On Wall Street on Friday the Dow Jones industrial average
<> and the Standard & Poor's 500 Index <.SPX> fell around
0.5 percent each.
DOWNWARD DOLLAR
Japan's yen held gains against the dollar, supported by an
unwinding of risky positions as continuing losses in Japanese
stocks kepts investors alert to the possibility of a U.S.
recession and its potential effect on other economies.
"There's no change in the momentum to sell the dollar,"
said Hideki Amikura, a forex manager at Nomura Trust and
Banking. "More Nikkei losses are likely to push the dollar/yen
lower."
By 0128 GMT the dollar traded at 106.83 yen <JPY=>, little
changed from late last week, when it fell as low as 105.92 yen,
its lowest since May 2005.
Oil inched towards $91 a barrel, with prices supported by
the closure of Mexico's oil export terminals due to bad
weather, as well as OPEC's dismissal of calls to raise output.
U.S. light crude for February delivery <CLc1> rose 33 cents
to $90.90 a barrel in Asian trade.
Among metals, gold edged lower as Bush's tax cut plan
failed to inspire buying. Spot gold <XAU=> was trading at
around $879.00 an ounce, down from $881.90/882.60 in New York
on Friday.
