(Adds markets, quotes, updates prices)
By Louise Heavens
SINGAPORE, Jan 21 (Reuters) - Stocks in Asia resumed their
decline on Monday, with Tokyo shedding more than 3 percent
after a proposed U.S. stimulus package did little to soothe
fears the world's top economy will tip into a recession.
Worries about the economy kept the dollar within striking
distance of a near three-year low against the yen as investors
unwound risky currency carry trades, and Japanese government
bond futures rose to a two-year peak as investors sought a safe
haven in the face of deteriorating economies and slumping
stocks.
Stock markets in Japan, South Korea, Hong Kong and
Australia nursed losses of between 1.7 and 2.7 percent, dragged
lower by banks and financial companies as the sector continues
to suffer the worst fallout of the U.S. subprime mortgage
crisis.
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 2.6 percent by
0350 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 2.9 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.
"Technology shares, heavily dependent on the U.S. economy
and China-related stocks such as shipbuilders will likely
continue to be pressured by global credit troubles," said
LeeSun-yeop, an analyst at Goodmorning Shinhan Securities.
Australia's S&P/ASX 200 index <> fell 2 percent, while
Hong Kong's Hang Seng <> shed 3 percent and Singapore's
FTSE ST index <.FTSTI> fell 1.4 percent.
MSCI's broadest index of shares outside of Japan
<.MIAPJ0000PUS> was down 0.9 percent by 0113 GMT. The MSCI
ex-Japan index, which hit an all-time high in November, is down
only around 3 percent since July as some investors reckoned
emerging markets would emerge from the credit crisis relatively
unscathed.
But those hopes are fading and the index has lost 10
percent since the start of the year as fears that equity
markets are heading for a long bear phase have taken hold.
On Wall Street on Friday the Dow Jones industrial average
<> and the Standard & Poor's 500 Index <.SPX> fell around
0.5 percent each.
DOLLAR DOLDRUMS
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 0335 GMT the dollar traded at 106.69 yen <JPY=>, little
changed from late last week, when it fell as low as 105.92 yen,
its lowest since May 2005.
Both the euro <EUR=> and sterling <GBP=> fell versus the
dollar on worries about the European and British economies.
Japan's March 10-year futures <2JGBv1> hit a two-year high
with a 0.35 point to 138.48. The five-year yield <JP5YTN=JBTC>
fell 3.5 basis points to 0.820 percent, the lowest since
January 2006. JGB investors are speculating that the Bank of
Japan's next policy move may be to cut interest rates if Japan
suffers from the troubles abroad.
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 $90.87 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 $880 an ounce, down from $882 in New York on Friday.
(Editing by Lincoln Feast)
