* U.S. auto task force rejects GM, Chrysler turnaround
plans
* Asian stocks, U.S. futures slump on worries over U.S.
autos
* Stock losses threaten this month's global rally
* U.S. Treasuries, yen gains as risk aversion returns
* Spanish banks drop as much as 8 percent after rescue news
By Rafael Nam
HONG KONG, March 30 (Reuters) - Asian shares slumped and
were headed for their biggest daily fall in four weeks, while
U.S. Treasuries gained after a U.S. task force rejected
turnaround plans for automakers GM and Chrysler.
S&P stock futures dropped and European shares opened lower,
with investors also spooked by news on Sunday that Spain would
bail out regional savings bank Caja Castilla La Mancha, marking
yet another official rescue of a firm hit by the global crisis.
[]
Europe's FTSEurofirst 300 <> fell 1.2 percent in
early dealings on Monday and Spanish bank shares fell up to 8
percent.
The U.S. announcement by the White House autos panel marked
a stunning reversal for GM and Chrysler and raises the prospect
of bankruptcies that could further debilitate the already
ailing U.S. economy. []
The news sparked a fresh wave of risk aversion among
investors, boosting the yen and U.S. Treasuries and setting
back a stocks rally that started in earlier March on optimism
the global economy may be bottoming out and the United States
may finally be getting to grips with toxic debt on banks'
books.
News on the U.S. auto firms comes ahead of a busy week that
will feature the G20 gathering in London, a policy meeting by
the European Central Bank, and employment data in the United
States.
"Anything that spells of rejection in terms of bailout
these days is not treated very well. We've seen threats of this
before on other things, and it tends to spook the market a
bit," said David Spry, a research manager at F.W. Holst in
Sydney.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> extended its slide after the autos news. It was
down 4 percent as of 0610 GMT.
The gauge was headed for its biggest daily percentage fall
since a 4.3 percent decline on March 2, when fears about U.S.
insurer AIG <AIG.N> had sent global stock markets stumbling.
Asian stocks went on to hit their 2009 low on March 4,
before staging a spectacular recovery that as of last week had
raised the Asia MSCI index outside Japan by 26 percent.
U.S. stock futures were also hit on Monday, sending the S&P
500 <SPc1> down 2.3 percent. In Japan, the Nikkei average
<> slumped 4.5 percent.
"We are still not out of the woods as far as the economic
landscape goes. Job losses are mounting in the U.S. and I feel
the developments of late represent the economy is just coming
off the bottom," said Stephen Roberts, an economist for Nomura
in Sydney.
The U.S. autos task force on Monday determined that the
turnaround plans submitted by General Motors Corp <GM.N> and
Chrysler LLC could not ensure their viability.
The fate of GM has been of particular concern. The U.S.
administration pledged only to fund operations at the biggest
U.S. auto maker for the next 60 days, instead of granting GM's
request for up to $30 billion in loans.
Rick Wagoner, GM's chief executive since 2000, also
resigned under pressure from the U.S. task force.
Asian stock indices accelerated losses on the news. Shares
in South Korea <>, Hong Kong <>, Taiwan <>,
Singapore <.FTSTI>, and India <> were down more than 3
percent.
The news provides a bleak backdrop for leaders of the
world's biggest economies, who gather for a G20 meeting this
week in London.
The Financial Times, quoting a draft communique, said the
leaders are aiming to restore global growth by the end of 2010.
[]
The meeting comes as Washington has been pressing for more
stimulus measures in response to the worst global economic
crisis since the 1930s, but some European governments have
instead favoured more emphasis on regulatory reforms.
Countries have so far responded to the global downturn with
a mixture of economic stimulus measures, deep interest rate
cuts and in some cases quantitative easing measures that pump
money into banking systems.
RISK AVERSION RETURNS
The dollar reversed early gains to drop 1 percent to 96.98
yen <JPY=> to fall further from this month's four-month high of
99.69 yen.
The euro fell 1.5 percent to 128.10 <EURJPY=>, dipping
briefly below 128.00, after a steep fall in the previous
session.
The autos news also prompted investors to reduce risky bets
for higher-yielding currencies that had rallied strongly last
week alongside stock markets.
The Australian dollar fell more than 2 percent to 66.14 yen
<AUDJPY=R> and the New Zealand dollar lost 2.2 percent to 54.45
yen <NZDJPY=R>.
U.S. Treasuries, which earlier in the session had already
been supported by U.S. Federal Reserve plans to purchase
long-dated U.S. government bonds later in the day, advanced.
The 10-year note <US10YT=RR> climbed 12/32 in price to
yield 2.716 percent, a fall of 5 basis points from late U.S.
trade on Friday. The 30-year bond <US30YT=RR> gained 21/32 in
price to 3.580 percent, down 4 basis points.
Gold, another safe-haven asset class, edged higher to
$924.20 per ounce from its New York's notional close of
$922.10.
By contrast, oil prices <CLc1> fell $1.19 to $51.19 a
barrel, building on losses of around $2 on Friday.
Expectations of weak near-term energy demand and the
stronger dollar have also encouraged investors to take profits
on oil's recent rally which has put crude prices on course for
their biggest monthly gains since October 2007.
