* Asian stocks slump to lowest since Jne 2004
* Yen pares gains slightly on G7 currency statement
* Japanese lenders drop on capital-raising concerns (Repeats
to more subscribers)
By Rafael Nam
HONG KONG, Oct 27 (Reuters) - Asian shares extended losses
on Monday, with Japan's Nikkei briefly hitting its lowest since
1982, as central bank policy moves including a record rate cut
in South Korea were not enough to allay fears of a global
recession.
Trading was chaotic amid continued doubts over whether
governments can stem a crisis that is menacing financial
markets, worldwide economic growth and company earnings.
Japan pledged fresh measures on Monday to try to shield the
world's second-biggest economy from the financial crisis and
said the Group of Seven would issue a joint statement on the
yen, which has risen rapidly as investors flee riskier
investments.
The yen <JPY=> slipped slightly against the dollar after
the comments while Japanese shares <> pared losses but
remained in negative territory.
Earlier in the day, South Korea slashed interest rates in
an emergency meeting and Australia's central bank said it had
intervened on Friday to support its tumbling currency.
The actions come in response to last week's sell-off in
global stock and currency markets that set all kinds of largely
unwelcome milestones. Signs of caution were evident throughout,
as gold and some regional bonds rose on a bid to safety.
"The outlook in terms of growth and exports remains shaky,
so it's hard to make a case for any sustained EM (emerging
markets) rally for now," said Win Thin, a senior currency
strategist at Brown Brothers Harriman in an email to clients.
"We continue to believe that markets will reward those
countries that are acting proactively to avoid a deeper
economic slowdown," he also wrote.
Japan's Nikkei index <> swung wildly in the morning
session, falling to its lowest level in 26 years in early trade
before making a short-lived rebound. By midday it was off 0.2
percent.
Lenders such as Mitsubishi UFJ Financial Group <8306.T>
tumbled on concerns they will need to raise billions of dollars
to offset hefty losses on their stock portfolios as a global
equity market rout continues. MUFJ fell 11 percent.
After a volatile start, the MSCI index of Asian stocks
outside Japan <.MIAPJ0000PUS> fell for a fourth consecutive
session, losing 2.8 percent as of 0325 GMT, marking its lowest
since June 2004.
The MSCI index has now lost about 41 percent since Sept 12,
right before the collapse of investment bank Lehman Brother'
set off a fresh round of heavy market selling. The index is
down more than 60 percent for the year.
Other Asian markets also dropped amid scepticism that moves
by policy makers will be enough in the short-term to stave off
eroding economies or sharp drops in corporate earnings.
South Korean shares <> slumped 2.8 percent, even after
the central bank cut interest rates by 75 basis points in its
biggest such move ever. []
Taiwan <> and Hong Kong <> shares fell more than 5
percent each at one point, with smaller losses seen in
Australia <> and Shanghai <>. Trading was briefly
halted in the Philippines after the market <> fell 10
percent, while Singapore was closed for a holiday.
POLICY FIREPOWER?
The actions by Asian policy makers come days ahead of a
widely expected interest rate cut of 50 basis points by the
U.S. Federal Reserve on Wednesday and the U.S. advance report
on third-quarter economic growth due on Thursday.
[]
Few expect the sinking global economy to recover quickly
despite moves by central banks to cut rates, or government
efforts that have so far included pledging about $4 trillion to
support banks and thaw frozen credit market.
Emerging markets have been hit especially hard in the
global sell-off. Several more countries are expected to turn
the International Monetary Fund after Ukraine on Sunday agreed
on a $16.5 billion loan package to ease the effects of the
financial crisis. []
Investors have thus looked for safer havens, or to other
asset classes that have recently outperformed, while dumping
those deemed as riskier.
Gold <XAU=> gained to $734.95 an ounce compared to $731.50
in late New York trading on Friday, paring earlier strong
gains.
The Group of Seven big industrialised economies said on
Monday that a rapid rise of the yen against other currencies
was bad for both markets and the economy and that it would
watch developments and cooperate accordingly.
The yen slipped slightly as traders pondered whether the G7
statement could be a precursor to official intervention in
major currencies to stem the sharp surge in the yen.
The currency in the world's second-largest economy has
gained as many market players have rushed to unwind carry
trades built up over the last several years in which they
borrowed the yen to invest in higher-yielding assets.
The dollar edged up to 94.05 yen <JPY=> from near 93.60
after the comments, holding off a 13-year low of 90.87 yen hit
on Friday. The euro rose to 118.30 yen <EURJPY=R> from 117.65
yen.
Oil <CLc1> was range-bound at near $64 a barrel on Monday,
stopping a slide that saw crude tumble $4 to a 16-month low
despite an emergency production from OPEC.
