* Uncertainty over U.S. bailout plan weighs on equities
* China stocks jump 5 pct on buybacks, market reforms
* Gold and debt firm as credit concerns persist
* Weakening U.S. economy may prod the Fed to cut rates
(Updates prices, details, quotes)
By Kevin Yao
SINGAPORE, Sept 25 (Reuters) - Asian stocks mostly fell and
the U.S. dollar dipped against major currencies on Thursday,
pressured by doubts over the U.S. government's proposed $700
billion bailout plan and worries about the economic fallout
from the crisis.
Gold <XAU=> gained, rising toward Tuesday's seven-week
high, and short-term government debt prices climbed on concerns
the U.S. bank rescue may be insufficient to deal with the
turmoil.
The euro rose 0.6 percent from late U.S. trade to around
$1.47 <EUR=> while the dollar index <.DXY>, which tracks the
currency's performance against six major currencies, dropped
0.5 percent. The dollar fell slightly against the yen <JPY=>.
"The bailout offers some respite for the financial sector
but does little to change the economic outlook, which continues
to deteriorate," said Dwyfor Evans, currency strategist at
State Street Global Markets in Hong Kong.
"If the bailout plan disappoints in the coming days it
should give a boost to the yen's safe-haven status relative to
the dollar," he said in a note.
Warren Buffett's $5 billion bet on Goldman Sachs <GS.N> and
the Federal Reserve's new currency swap lines with more central
banks helped restore some investor confidence in the dollar,
but the buying interest was still limited by worries about the
U.S. economy, analysts said.
PRESSURES ON STOCKS
Uncertainty about the $700 billion bailout plan also
weighed on U.S. stocks, knocking the Dow Jones industrial
average <> and the broader-based S&P 500 index <.SPX> by
0.3 percent and 0.2 percent respectively.
Asian markets picked up Wall Street's cue.
The MSCI index of Asia-Pacific stocks outside of Japan
<.MIAPJ0000PUS> fell 0.4 percent by 0355 GMT, though it
remained well above a two-year low hit last Thursday.
Japanese shares also lost ground, with the Nikkei average
<> falling 1.4 percent.
But Chinese stocks jumped more than 5 percent, bouyed by
share buybacks by state-owned firms and hopes on market
reforms.
Hong Kong stocks <> edged up, with shares in Bank of
East Asia <0023.HK> jumping 5 percent after the lender denied
rumours questioning its financial health that had prompted a
run on its branches.
The U.S. bailout package unveiled late last week triggered
a temporary rally in global stocks but concerns over when
Congress will approve the plan and uncertainty about its final
form quickly eclipsed that optimism.
U.S. congressional Democrats and Republicans plan to meet
on Thursday to draft a final bipartisan plan on the bailout
plan, a Democratic source told Reuters on Wednesday.
Bush administration officials warned an angry Congress the
U.S. financial system would sink into Great Depression-style
chaos unless it passed the bailout plan.
President Bush added his voice to the warning, saying an
economic disaster loomed if Congress failed to act swiftly.
[]
FLIGHT TO SAFETY
A bleak assessment of the U.S. economic outlook from Fed
Chairman Ben Bernanke on Wednesday bolstered the view the U.S.
central bank will lower its benchmark interest rates again by
year-end. []
The Fed cut its benchmark federal funds rate to 2 percent
from 5.25 percent in a series of moves starting in September
2007 after the global credit crisis blew up.
Short-term U.S. Treasury debt was in demand, suggesting
funding needs once again have moved to the forefront of
investors' minds. The yield on the 1-month bill slipped to a
mere 10 basis points, down from 12 basis points late in New
York on Wednesday.
The rate on overnight dollar funds <USDOND=> in Asia held
steady to 2.5-3.5 percent from a peak of about 10 percent hit
last week, signalling improved liquidity conditions after
central banks have pumped billions of dollars into the money
market in recent days.
"Over the medium term, we expect investors will continue to
look for ways to trim down exposure to risks that are either
excessive or difficult to assess," said Steve Wang, credit
analyst at TriBridge Investment Partners in Hong Kong.
Gold prices rose as far as $888.8 per ounce, up about 0.9
percent from New York's close on Wednesday while crude oil
futures <CLc1> held steady near $105.90 per barrel as falling
U.S. inventories were countered by evidence of slowing U.S.
demand.
(Editing by Lincoln Feast)
