Asian markets ended mostly lower Monday, while the price of gold hit a new record high above $900 a troy ounce as investors sought protection against a potential U.S. recession and a weaker dollar. Hong Kong stocks closed 1.5 percent lower and South Korean shares lost almost 1 percent.
Beleaguered U.S. banks look set to receive capital injections, with Merrill Lynch seeking about $4 billion, according to The Financial Times, and Citigroup on the lookout for foreign investments. The financial firms are set to report earnings this week as investors worry about more U.S.-mortgage related writedowns. Merrill Lynch is expected to suffer $15 billion in the latest quarter.
The Dow Jones, Standard & Poor's 500 and Nasdaq Composite indexes all dropped on Friday, after a warning by American Express of mounting credit card defaults and a slowdown in consumer spending.
South Korea's KOSPI finished down almost 1 percent to a five-month closing low, as investors continued to dump exporters such as LG Electronics amid deepening worries that a U.S. economic recession would hit demand for South Korean goods.
Australia's S&P/ASX200 Index ended slightly lower after a see-saw session, for the sixth consecutive session of declines, weighed down by falls in banks and miners. Gains in gold shares such as Newcrest Mining and Lihir Gold helped to pare back the market's earlier losses.
Taiwan stocks rose 1.79 percent to a one-week closing high, led by gains in Cathay Financial, following a win by Taiwan's China-friendly Nationalist Party (KMT) in Saturday's legislative elections.
Hong Kong blue chips fell sharply in the afternoon session, closing 1.5 percent lower. China plays declined, as heavyweight and Asian oil refiner Sinopec tumbled further after China said last week it would implement price controls to counter inflationary pressures.
Singapore's Straits Times Index closed down 2.1 percent, with blue chips and S shares leading the declines.
China's Shanghai Composite Index rose, ending 0.2 percent, thanks to surges in shares of companies based in Fujian province on hopes of closer China-Taiwan trade links after the KMT's landslide win in Taiwan elections.
Gold Hits $900
With the falls seen in global equity markets, investors have opted for safety above all. Spot gold hit a record $914 an ounce on Monday, 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.
Japanese financial markets were closed for a public holiday, Coming of Age Day. Markets will reopen on Tuesday, Jan. 15.