* Japan's broad Topix stock index hits 25-year low
* Tokyo's Nikkei nears 26-year low
* MSCI share index of Asia outside Japan up from 3-mth low
* Dollar index touches 3-year high, then trims gains
* Australian dollar jumps after cenbank holds rates steady
By Masayuki Kitano
TOKYO, March 3 (Reuters) - Stocks in Tokyo hit a 25-year
low on Tuesday and most major indexes in Asia were down, caught
in the downdraft of risk aversion sparked by renewed concern
over the global financial sector.
Japan's broad Topix index <> hit a 25-year intraday
low, while the Nikkei share average <> slipped to a
four-month trough and was hovering just above a 26-year low hit
last October.
However, there were signs that some investors were picking
up bargains and shaving their safe-haven positions. The MSCI
index of Asia-Pacific stocks outside Japan swung from a
three-month low to show a small gain on the day and the dollar
index backed off a three-year high reached in early dealings.
Financial markets have been shaken this week by concerns
that global financial-sector woes are deepening. U.S. insurer
American International Group (AIG) <AIG.N> posted a record
quarterly loss on Monday, and HSBC announced Britain's
largest-ever rights issuet bolster its balance sheet.
[] []
That rattled Wall Street on Monday, where the the Dow Jones
industrial average <> closed at a 12-year low and had
earlier sent the FTSEurofirst 300 index of leading European
shares down to end a whisker away from a lifetime low. []
[]
"U.S. stocks aren't going to stop falling without some kind
of message from the government, along with some kind of fresh
policy package, whether stimulus or financial," said Noritsugu
Hirakawa, a strategist at Okasan Securities.
Japan's Nikkei <> fell as far as 7,088.47, its lowest
level since hitting a 26-year low of 6,994.90 in October. The
Topix fell as low as 714.96.
Still, Japanese shares trimmed their losses, which dealers
attributed to investors buying stocks on price dips.
The MSCI Asia index of shares outside Japan hit a
three-month low of 202.69 <.MIAPJ0000PUS>, but later turned
positive for a gain on the day of 0.9 percent.
While stock indexes in Singapore <.FTSTI>, Jakarta <>
and the Philippines <> showed marginal gains, most other
indexes were down, including Hong Kong <>, Sydney <>,
Taiwan <>, Seoul <> and Bombay <>.
The Australian dollar jumped after Australia's central bank
held its policy interest rate steady at 3.25 percent,
surprising some in the market who had thought the latest
turbulence in global markets would prompt another easing.
[]
The decision boosted the Australian dollar <AUD=>, which
was up 1.7 percent on the day.
DOLLAR INDEX RISES
However, there were also signs that investors were trimming
safe-haven positions after a run up in the value of these
assets.
The dollar index, which measures its value against a basket
of six currencies, climbed to 89.026 in early Asian trading on
Tuesday, its highest level since April 2006.
After trimming gains it was down 0.4 percent on the day at
88.607 <.DXY>.
The index has climbed 9.5 percent this year as the U.S. S&P
500 stock index has fallen 19 percent, reflecting rising risk
aversion.
Reflecting similar concerns, the Chicago Board of Options
Exchange Volatility Index <.VIX>, known as Wall Street's fear
gauge, spiked 13.6 percent on Monday.
Investors also trimmed positions in U.S. debt, another
safe-haven asset. Benchmark U.S. 10-year Treasuries fell 17/32
in price to yield 2.927 percent <US10YT=RR>, after they had
rallied on Monday.
Oil held steady above $40 a barrel after tumbling 10
percent on Monday on concerns that a deepening global downturn
would cut further into fuel consumption. []
Gold <XAU=> was also holding steady at just below $930 an
ounce.
