* Japan broad Topix index at 25-yr low, Nikkei near 26-yr
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 also fell, 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 low, while
the Nikkei share average <> slipped to a four-month trough
just above a 26-year low hit last October.
However, there were signs that some investors were hunting
bargains and trimming their safe-haven positions. The MSCI
index of Asia-Pacific stocks outside Japan swung a small gain
on the day and the dollar index backed away from a three-year
high.
European shares are seen edging up after sharp losses, with
financial spreadbetters expecting major markets to open between
0.4 percent and 0.9 percent higher.
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 issue to bolster its balance sheet.
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That rattled Wall Street on Monday, where the Dow Jones
industrial average <> closed at a 12-year low and the
FTSEurofirst 300 index of leading European shares came within a
whisker of 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 October. The Topix fell as low as 714.96.
But Japanese equities later pared their losses, with the
Nikkei closing 0.7 percent lower at 7,229.72 and Topix down
1.06 percent at 726.80 <>.
The MSCI index of Asia-Pacific shares outside Japan hit a
three-month low <.MIAPJ0000PUS>, but later turned positive for
a gain on the day of 0.7 percent.
Some traders in Tokyo said a Wall Street Journal report
that the Obama administration may set up investment funds to
purchase bad loans and other distressed assets may have lent
Asian and Japanese shares some support. []
Masayoshi Okamoto, chief of dealing at Jujiya Securities
also said domestic investors were no longer offloading shares
as aggressively as last week.
The Australian dollar <AUD=> 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. []
DOLLAR INDEX RISES
The dollar index, which measures its value against a basket
of six currencies, climbed to 89.026 on Tuesday, its highest
level since April 2006, but later retreated to and was down 0.6
percent on the day at 88.491 <.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.
On Tuesday investors trimmed positions in safe haven U.S.
debt, with U.S. 10-year Treasuries falling 17/32 to yield 2.927
percent <US10YT=RR>, after they had rallied on Monday.
Oil held steady near $40 a barrel after tumbling 10 percent
on Monday on concerns that a deepening global downturn would
cut further into fuel consumption. []
Gold <XAU=> held steady at just below $930 an ounce.
[]
