GLOBAL MARKETS-Stocks wilt on nagging economy worries, bonds up

                                
 By Louise Heavens
                                
 SINGAPORE, Jan 28 (Reuters) - Shares in Asia fell, with
Japan and South Korea down around 1.5 percent, as concerns over
the health of the U.S. economy came back to haunt stock
markets, sending investors to seek a safe haven in bonds.
                                
 The dollar dipped slightly against the euro as investors
nervously jockeyed into position ahead of this week's Federal
Reserve meeting, at which the bank is set to cut interest rates
again, having slashed them in an emergency move last week.
                                
 Oil drifted back down to $90 a barrel with traders saying
Friday's $1.30 surge might have been overdone after Wall Street
<.DJI><.IXIC> ended the week on a down note following two days
of sharp gains. [.N]
                                
 The market mood was calmer after last week's nerve-wracking
rollercoaster, which saw global equity markets toppled by
growing despair over the U.S. economy earlier in the week and
then lifted by a $150 billion stimulus plan agreed by U.S.
legislators and the White House. [ID:nN24261782]
                                
 But investors were on edge as they sifted through French
bank Societe Generale's <SOGN.VX> trading scandal.
                                
 On Sunday the bank defended its handling of the world's
biggest trading scandal, but admitted its risk systems had
failed to detect a 50-billion-euro market bet by a lone trader.
For a list of stories, click on [nL24876433]
                                
 The benchmark Nikkei average <.N225> was down 1.8 percent
by 0052 GMT, after finishing Friday up 4.1 percent to mark its
biggest one-day gain in nearly six years. Shares in exporters
such as Sony Corp <6758.T> fell more than 2 percent.
                                
 Seoul's KOSPI index <.KS11> shed 1.34 percent.
                                
 "Although aggressive U.S. stimulus measures are likely to
stablise global financial markets, South Korea and its
companies are still vulnerable to economic risks," said Lee
Young-won, a strategist at Prudential Investment & Securities.
                                
 Australia's market was shut for a public holiday, while
Hong Kong <.HSI> was expected to open lower.
                                
 DAVOS DOWNER
                                
 World business leaders gathered in Davos for last week's
meeting said on Saturday the worst might yet be to come in a
financial crisis driven by continuing fears of bank losses and
uncertainty over U.S. emergency stimulus measures.
                                
 Banks said there were few cures for a financial system
faced with hundreds of billions of dollars in investments which
have turned bad.
                                
 "It will be a while before you see a return of normalcy in
banking and markets," Merrill Lynch <MER.N> CEO John Thain
said. [ID:nL26541130]
                                
 For now, some investors sought safety in Japanese
government bonds.
                                
 March 10-year futures <2JGBv1> rose 0.49 of a point to
137.85, while the benchmark 10-year bond yield <JP10YTN=JBTC>
fell 5 basis points to 1.425 percent.
                                
 The dollar edged up to 106.74 yen <JPY=>, holding above the
trough of 104.95 yen struck last week as global equities
tumbled, its lowest since May 2005.
                                
 The euro edged up 0.1 percent from late U.S. trade on
Friday to $1.4690 <EUR=>.
                                
 U.S. crude <CLc1> fell 59 cents to $90.12 a barrel by 0108
GMT.
 (Editing by Valerie Lee)