Asian Stocks Sink on Economic Worries

It was a dismal session for Asian stocks Monday, with markets dragged down by financial counters. Japan finished almost 4 percent lower. South Korea shed nearly 3 percent and Australia declined for the 11th straight session, down 2.9 percent.

Worries about the U.S. economy kept the U.S. dollar within striking distance of a near three-year low against the yen

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[JPY-TN  Loading...      ()   ] as investors unwound risky currency carry trades, and Japanese government bond futures rose to a two-year peak as investors sought a safe haven in the face of deteriorating economies and slumping stocks.

Financial sector stocks were hit hard, after their U.S. peers absorbed the brunt of Friday's selling on concern over the spreading fallout from the subprime mortgage crisis.  Citibank's Japan shares, South Korea's Kookmin Bank, Australia's Westpac Bank, and Singapore's DBS Group were all sharply lower.

President George W. Bush called for an economic stimulus plan worth up to $150 billion in tax cuts and other measures to bolster the U.S. economy on Friday, but U.S. stocks fell on fears
it was not enough to prevent a recession. All the major U.S. stock indexes fell, closing out the worst week for the S&P 500 in five years. U.S. stock markets will be closed on Monday for a public holiday.

Japan's Nikkei 225 Average

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[NIKKEI  Loading...      ()   ] dropped 3.9 percent, its lowest close since Oct 2005, battered by selling of bank shares and investor dumping of blue-chip shares on disappointment at a U.S. economic stimulus proposal. Advantest and other chip-related shares continued to fare poorly, while Softbank extended its losses
after Japan's third-largest wireless carrier said it would unveil
a new service, including a new fee system, later in the day.

South Korea's KOSPI closed 2.95 percent down, its biggest daily fall in two months, with exporters such as LG Philips LCD slumping on worries the U.S. economy may tip into recession, despite efforts to boost the economy. 

The Australian share market shed 2.9 percent, extending its longest losing streak in a quarter of a century, on renewed U.S. recession fears and concern over the health of global financial markets. Financial stocks led the declines, with asset manager Allco Finance Group tumbling over 35 percent on worries over its health.  

Hong Kong blue chips fell 5.5 percent. Air China was sold off in heavy trade following a proposal by its parent to invest in rival China Eastern. Among the top blue chip losers, Bank of China tumbled after a newspaper reported the lender is expected to announce a significant write-down of its failed investments in U.S. subprime mortgage securities in the fourth quarter.

Singapore's FTSE Straits Times Index slid 6 percent.  But shares of Ascendas Real Estate Investment Trust edged higher after it posted a 15.1 percent rise in third quarter distributable income, boosted by higher occupancy at its business park properties.

China's Shanghai Composite Index was down 5.1 percent on concerns big upcoming IPOs will cause a liquidity crunch.