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Asian Stocks Slide as US Rescue Plan Disappoints

Asian markets were mostly lower, led by financials, while the U.S. dollar rose Wednesday on skepticism over a new plan from Washington to heal the banking industry that could cost as much as $2 trillion.

Details were in short supply about the U.S. Treasury's revamped rescue plan for financial institutions, sending disappointed investors searching for safety in assets such as gold after Wall Street dove 4 percent overnight.

A $838 billion economic stimulus bill passed the U.S. Senatebut faced further congressional dealmaking that could stretch into next week before it becomes a law. With trade protectionism a creeping fear in Europe and exports in Asia collapsing, malaise sank into markets and weighed on commodity prices. The U.S. dollar extended a broad rally against the euro. Crude oil prices were trading below $39 a barrel.

In South Korea, the KOSPI closed 0.7 percent lower, led by financials including KB Financial Group on concerns about the U.S. bank rescue plans, but gains in shares of automakers and Doosan Group affiliates shares lent the main index a modicum of support.

Australian stocks fell for a second day as investors remained wary amid concern that the current flow of earnings reports could still hold some nasty surprises. However, miner Rio Tinto helped limit the losses, rising 6.2 percent on hopes it was closing in on a deal with a major shareholder that would help to ease its hefty debt burden.

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Hong Kong shares snapped a five-day winning streak to drop 2.5 percent after the intensely awaited U.S. rescue plan wasn't seen as sufficient remedy to shore up the ailing financial system. Europe's biggest lender HSBC Holdings slid 4.8 percent. Traders noted that a large number of short positions had been built up in the HSBC stock in the last few days after the stock climbed nearly 15 percent from a multi-year closing low of HK$55 three weeks ago.

Singapore's Straits Times Index moved 1.1 percent into the black with several blue-chip heavyweights such as UOB reversing losses. Container shipping line Neptune Orient Lines was down 3.2 percent after posting a $149 million net loss in the fourth quarter due to a slump in cargo volume amid the global economic downturn.

China's Shanghai Composite Index closed 0.2 percent lower, but hopes for an economic recovery and fresh government aid to industries helped the index outperform the region. The government may cut consumption taxeson alcohol, cosmetics, jewelry and watches, raise import tariffs on luxury consumer goods, and lift export tax refunds on products such as home appliances and furniture, the newspapers said. The threshold at which individuals start paying income tax might be raised.

Japan markets are closed for a public holiday. Markets will reopen Thursday.