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Asian Stocks Mostly Lower, Wary of US Plan

Asian markets were mostly weaker Monday after Washington unveiled an emergency plan to rescue the top U.S. mortgage finance companies, offering to buy shares if necessary. Japan and South Korea both closed slightly lower.

The plan was hatchedin an attempt to calm investors after Fannie Mae and Freddie Mac , stock both plummeted more than 40 percent last week on spiraling fears that both companies, which are pillars of the housing market, were under capitalized and the credit crisis toppled a fifth U.S. bank. However, uncertainty more than confidence rules the markets.

U.S. stock index futures rose following the news, while a recovery in the U.S. dollar also pushed U.S. crude futures down by more than $1 to hover at $144 a barrel in Asian trading Monday.

Japan's Nikkei 225 Average fell 0.2 percent as Mitsubishi UFJ Financial Group gave up early gains on emergency U.S. moves to help troubled home financing providers. But falls were limited by gains in steelmakers such as JFE Holdings, which said it may raise prices, while trading houses were solid on continuing high oil prices.

Seoul shares closed slightly lower as record oil prices weighed on airlines and automakers, while financials struggled despite U.S. moves to rescue embattled mortgage lenders. Worries about South Korean earnings persist as the second quarter results season gets underway.

Australian shares fell 1.2 percent to a near two-year closing low, with National Australia Bank leading declines on worries about the impact of financial sector woes and high oil prices on economic growth.

Hong Kong shares gave up early gains to closed 0.8 percent lower, as some investors read the U.S. government's proposed bailout of its troubled home financers as a sign of much deeper trouble in financial markets. Initial relief over the U.S. government's support quickly faded, and investors sold shares in HSBC Holdings, sending the stock 1.9 percent lower. Bucking the broad market trend, Zijin Mining which jumped more than 5 percent on news that China's big zinc smelters were meeting on Tuesday, after smaller rivals cut production over the weekend to lift local prices.

Singapore's Straits Times Index slipped 0.8 percent with bank stocks such as DBS Group leading the declines.

China's Shanghai Composite Index closed 0.8 percent higher, despite diminishing hopes that the government might loosen economic policy slightly and support the market if necessary to preserve stability before and during next month's Beijing Olympics.

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