* Asian shares hit 2-month lows; S.Korea slumps 3.7 pct
* Japan's Topix at 25-yr lows; Nikkei slides to 4-mth lows
* Emerging currencies routed; won hits 3-mth low
* Safe-havens such as U.S. Treasuries, dollar gain
By Rafael Nam
HONG KONG, Feb 20 (Reuters) - Asian stocks slumped on
Friday to their lowest since early December, led by big losses
in South Korea, as fears about the global economy and the
financial sector led investors to shed riskier assets.
In a tough week for global markets, the MSCI index of
Asia-Pacific stocks outside Japan is headed for an 8 percent
slump for the week -- its worst since a 10 percent weekly drop
in late November when the gauge touched five-year lows.
The sell-off in U.S. markets overnight following weak U.S.
employment data and fears of nationalisation of U.S. banks
spread into Asia, with European shares also set to track these
losses, as investors shift to safer assets such as U.S.
Treasuries and the dollar.
The tough markets indicate that a deluge of rescue packages
-- with measures ranging from increased spending in the United
States to the outright buying of corporate debt in Japan -- has
yet to win over investors.
"The biggest problem is that there are very few buyers in
the market. Risk tolerance of global investors is falling,"
said Takashi Kamiya, chief economist at T & D Asset Management.
"Even though countries like Japan and the United States are
expanding their government spending, consumer demand hasn't
followed due to heavy consumer debt, and that will prevent the
economy from a full-fledged recovery."
The MSCI index of regional stocks outside Japan slumped 2.9
percent as of 0705 GMT, after earlier hitting its lowest level
since Dec. 2. The gauge is not far off from a low of 194.03 hit
in late November.
The latest fall comes after data on Thursday showed U.S.
workers drawing unemployment aid jumped to a record at nearly 5
million, suggesting the 13-month-old U.S. recession is
deepening.
In another bad omen for Asian exporters that depend on the
recovery of the world's largest economy, U.S. lender stocks hit
17-year lows on fears they would be nationalised, reflecting
concerns about the stability of the financial sector.
Other sources of concerns abound. Japan's central bank said
on Friday a deterioration in corporate profits had gathered
pace, while investors also fret about the economic gloom
gripping cash-strapped eastern Europe. []
South Korea, another country that has been hit hard by the
crisis, on Friday saw its main KOSPI index <> slump 3.7
percent to its lowest close in more than two month, while the
won currency slid for a ninth consecutive session on fears
domestic banks will struggle to access overseas capital
markets.
Japan's Nikkei average <> fell 1.9 percent to its
lowest close since Oct. 27, while the broad-based Topix index
<> slumped 12 points to its lowest close since January
1984.
Among steep decliners were financials such as South Korea's
Shinhan Financial Group <055550.KS>. Exporters also fell, with
Japan's tyre maker Bridgestone Corp <5108.T> sliding 7.4
percent a day after forecasting a bigger-than-expected slide in
profits this year []
Other Major Asian index in Australia <>, Hong Kong
<>, Taiwan <.TWI>, India <BSESN>, and Singapore <.FTSTI>
slid 1-3 percent each.
EMERGING MARKET WOES
Investors sought to avoid the volatility by targeting
assets often prized for their liquidity and safety.
U.S. Treasuries gained during Asian trade, though inflows
were limited by caution given a record $94 billion in U.S.
government debt will be sold next week. Benchmark 10-year notes
<US10YT=RR> rose 11/32 in price to yield 2.811 percent, down
about 4 basis points from late U.S. trade the previous day.
The dollar jumped 1.6 percent to 1,504.9 won <KRW=>,
bringing the South Korean currency to its lowest closing level
since Nov. 24 and within sight of an 11-year low.
The dollar was broadly resilient against other currencies,
benefitting from a rush to liquidity. The euro fell about 0.6
percent to $1.2580 <EUR=>, though that was well off a
three-month low around $1.2510 reached on Wednesday.
Caution was also a key factor in the commodities market.
Spot gold prices <XAU=> climbed slightly to $975.70 an
ounce after on Thursday hitting as much as $985.95, the highest
since July on its march towards the $1,000 barrier that
analysts say will be breached soon.
Holdings in both gold and silver exchange-traded funds
<GLD><SLV.P>, which are often used by funds, both hit records.
U.S. crude futures for March delivery <CLc1>, which expire
later in the day, fell 93 cents to $38.65 a barrel, after
jumping 14 percent to top $39 a barrel on Thursday following
data showing an unexpected fall last week in U.S. crude
inventories.
April delivery contracts <CLc2> fell 96 cents to $39.22,
while London Brent for April delivery <LCOc1> lost 70 cents to
$41.29 a barrel.
