Asia stock markets resume slide on recession fears

 

A man watches a display showing stock prices at a brokerage firm in Hong Kong Monday, Oct. 27, 2008. Asian stocks swung mostly lower in choppy trade Monday as investors braced for more volatility after last week's massive sell-off. The Hang Seng index closed the morning session down 532 points, or 4.22 percents at 12,086.38 points. (AP Photo/Vincent Yu)

HONG KONG -- Asian stock markets resumed their downward slide Monday, led by a 12 percent plunge in the Philippines, as government rescue measures failed to ease fears that a global recession would be even worse than expected.

Investors were hesitant to wade back into equities, worried a stream of economic data from the U.S. this week could bring more bearish news about the world's largest economy and trigger another round of selling, analysts said.

"Investors aren't totally convinced the worst is over yet," said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong. "We're probably moving sideways this week and will see more volatility."

Japanese shares, after trading higher in the morning, retreated 5 percent to 7,266.83. The country's prime minister urged officials to draw up measures to calm volatile stock markets and to fend off further fallout from the crisis.

In South Korea, the Kospi skidded 3.4 percent even as the country's central bank slashed its key interest rate, by 0.75 percent, for the second time this month in a bid to boost the economy and reverse the market's recent slide.

Hong Kong's Hang Seng Index pulled back 4.2 percent and Australia's key stock measure lost 1.6 percent.

The Philippine stock market's key index plummeted 12.3 percent, to 1,713.83 points, steep losses that triggered a circuit-breaker that automatically halted trading for 15 minutes.

The biggest one-day drop since February 2007 was caused by "big fund players" withdrawing investments to get cash and meet redemptions at home, traders said.

"This is the loss of confidence in the market," said Emmanuel Soller, broker at EquitiWorld Securities Inc. "Our fundamentals were ignored; we followed the U.S. But I believe there was an overreaction by investors."

Tuesday's U.S. Federal Reserve meeting was more cause for caution. The central bank is expected to lower interest rates by at least a half-point to 1 percent, though the rate reduction is already priced into the market and unlikely to calm its restlessness.

On Friday on Wall Street, the Dow Jones industrial average fell 312.30, or 3.59 percent, to 8,378.95. By Monday morning, stock index futures were down, signaled a moderately lower open, with Dow futures down 82 points, or 1 percent, at 8,179. S&P and Nasdaq futures were also lower by about 1.5 percent.

In Japan, stocks fell despite a report that the government was considering massive capital injection into struggling banks in a bid to calm jittery financial markets.