* Unemployment climbs around the world, production plunges
* Asian stocks fall, Nikkei down 3.3 percent
* Dollar, yen lifted by renewed flight to safety
* New Zealand dollar at 6-yr low after central bank
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By Kevin Plumberg
HONG KONG, Jan 30 (Reuters) - Asian stocks snapped a
four-day winning streak on Friday and the yen and U.S. dollar
rose as investors retreated to safety with job losses
accelerating globally while Washington scrambled to finalise a
fix for banks.
Wall Street shares dove after a report said continuing
claims for U.S. unemployment were at a record high, while
Japanese stocks tumbled 3 percent after data showed
unemployment in the world's second-largest economy at a near
three-year high and industrial output plunging by a record 10
percent last month.
The New Zealand dollar, once favoured by investors because
of its high yield, dropped to another six-year low after the
country's central bank governor said interest rates will likely
have to be cut further, with swarming economic problems hurting
almost every corner of the world. The comments came just a day
after the central bank slashed its benchmark rate by 150 basis
points.
The severely weak economic reports supported expectations
that Japan's economy shrank by a double-digit percentage on an
annual basis in the last three months of the year. Focus later
this evening will be on the fourth quarter U.S. gross domestic
product data.
"There is no sign of bottoming out. As industrial output
posted a record drop, it is hard to expect a recovery anytime
soon," said Daisuke Uno, chief strategist at Sumitomo Mitsui
Banking Corp in Tokyo.
The 3.3 percent decline on the day of Japan's Nikkei share
average <> led the region, with the index on track for a
8.8 percent fall in January. That would be the worst
performance in January since 1997, according to Reuters data.
Toyota Motor Co stock <7203.T> was down 4.3 percent after a
company source told Reuters operating losses for the fiscal
year ending March 31 will likely be bigger than the 150 billion
yen forecast by the top automaker. []
Stocks in Asia-Pacific outside Japan <.MIAPJ0000PUS> were
down 1.1 percent on Friday and 8.4 percent in January,
according to an MSCI index. It was the first daily drop in the
index in a week.
Hong Kong's Hang Seng index <> fell 1.8 percent, led by
a 5 percent drop in HSBC <0005.HK> stock, which is being
hounded by speculation about dividend cuts and the need for
additional capital.
HOPE IS TROUNCED
Some optimism trickled into markets earlier this week after
the U.S. Congress progressed on a $825 billion stimulus
spending package and other efforts to ease the blow of a severe
recession. Yet, the White House plan is expected to face
formidable opposition in the Senate.
In addition, the fate of the banking industry was still up
in the air, with government negotiations about a plan to
separate bad assets at the banks hitting a snag, according to
CNBC TV. []
Downward pressure on equity markets lent some support to
U.S. Treasuries. The yield on the benchmark 10-year note
<US10YT=RR>, which moves in the opposite direction of the
price, slipped to 2.83 percent from 2.88 percent late on
Thursday in New York.
However, the yield was up 61 basis points in January, the
biggest one-month rise since April 2004, with investors
concerned about the amount of new borrowing needed to finance
the government's legion of rescue plans.
Despite the persistent selloff of U.S. stocks and
Treasuries, the dollar was a stalwart in January, strengthening
5.4 percent against a basket of major currencies <.DXY>. The
currency's deep liquidity and continued status as the world's
top reserve currency have acted like magnets for investors
fleeing risks that have mushroomed throughout the financial
crisis.
"We remain positive on the dollar as we retain our view
that regardless of policymaker actions at this stage, it will
take time for the entire financial system and the global
economy to adjust, and conditions will likely remain
unfavourable for risk in the immediate future, despite signs of
stabilisation," UBS currency strategists said in a note to
clients.
The euro fell 0.4 percent from late U.S. trade to $1.2902
<EUR=> after European Central Bank President Jean-Claude
Trichet warned overnight the ECB could push interest rates
below 2 percent and data showed the biggest monthly jump in
German unemployment in four years.
The dollar dipped 0.3 percent to 89.75 yen <JPY=> though
month-end dollar demand from Japanese companies capped losses.
U.S. crude prices were steady as concerns about a potential
strike among unionised U.S. refinery workers kept in check
demand worries after bleak economic data from the world's top
oil consumer nation.
Crude for March delivery was up 32 cents to $41.76 a barrel
<CLc1> []
(Additional reporting by Aiko Hayashi in TOKYO; Editing by
Tomasz Janowski)
