By Rafael Nam
HONG KONG, Jan 14 (Reuters) - Gold hit a record near $900
an ounce on Monday as investors sought protection against a
potential U.S. recession and a weaker dollar, and Asian stocks
remained pinned at more than three-week lows.
But Taiwan stocks <.TW> rose 1.8 percent to a one-week high
following a resounding win by the China-friendly Nationalist
Party (KMT) in Saturday's legislative elections, sparking hopes
of an easing in cross-strait tensions. []
After Wall Street's near-2 percent drop on Friday,
financial bookmakers predicted European stocks would open lower
on Monday, forecasting Britain's FTSE 100 <> would start
22-27 points down, Germany's DAX <> 18-24 points lower
and the French CAC 40 <> down 17-23 points.
Asian stocks have posted their worst start to the year
since the region's financial crisis in 1998, according to
Reuters calculations. A decade later, worries about a slowdown
in the United States, Asia's biggest export market, and the
U.S. housing sector, are hitting Asian shares.
The uncertainty has boosted the value of safe haven assets
such as gold, with investors steering clear of stocks at the
start of a week in which U.S. financial heavyweights such as
Citigroup <C.N> and Merrill Lynch <MER.N> are expected to post
big losses and more capital raising plans.
"Buying appetite has emerged after stocks dropped sharply
last week, but a meaningful rebound is unlikely as investors
look ahead to U.S. economic data and earnings from U.S.
financial institutions," said Lee Kyung-soo, an analyst at
Daewoo Securities in Seoul.
MSCI's measure of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> was off 0.03 percent as of 0635 GMT, after
earlier touching its lowest level since Dec. 20. Tokyo markets
<.T> were closed for a holiday.
South Korean shares <.KS> were down nearly 1 percent, while
markets in Australia <.AX> and Hong Kong <.HK> were flat to a
touch lower.
Wall Street dropped sharply on Friday following warnings,
including from credit card issuer American Express Co <AXP.N>,
about slowing U.S. consumer spending, a bad omen for Asian
exporters.
The worsening outlook for the world's largest economy
threatens to cripple what has been strong growth in Asia, with
stock markets posting double-digit gains in 2007, as reflected
in the one-third rise in the MSCI regional index.
GOLD NEAR $900
Investors continued to shift to safety, opting for gold
<XAU=>, which rose to a record $898.70 an ounce by 0640 GMT,
near a psychological $900 level, helped by rising expectations
of aggressive U.S. rate cuts by a Federal Reserve trying to
ease the impact of a likely U.S. economic slowdown.
"There's blue sky ahead and there's room for gold to go
higher. We are in uncharted territory, really," said Darren
Heathcote of Investec Australia in Sydney.
"We have a weaker dollar and that's encouraged people to
buy gold. We are going to be drawn towards $900 and test it."
This year's gold rally comes as the dollar has extended its
weakness into 2008 on the back of the worsening outlook for the
U.S. economy, with the currency hitting a six-week low against
the euro <EUR=> on Monday.
Oil edged higher, reversing falls earlier in the session,
with U.S. crude futures for February delivery <CLc1> up 38
cents cents to $93.07 a barrel.
