GLOBAL MARKETS-Stocks, dollar slide as U.S. bank troubles deepen

                                
 (Repeats to more Asian clients)
 (Updates with shares, government reactions, quotes)
                                
 By Rafael Nam
                                
 HONG KONG, March 17 (Reuters) - Asian stocks sank on Monday
to their lowest since August 2007 and the dollar tumbled as the
fire sale of U.S. bank Bear Stearns and the Federal Reserve's
emergency cut of a key lending rate sparked concerns that the
global credit crisis will claim more casualties.
                                
 European stocks were set to drop as well, with the FTSE's
100 <.FTSE> seen down as much as 1.8 percent and Germany's DAX
<.GDAXI> seen down 2.2 percent, while U.S. stock futures also
pointed to a sharply lower session.
                                
 The dollar sank to a record low against the euro and a
13-year low against the yen, sending spot gold and crude
futures hurling towards record highs.
                                
 Other safe-haven assets also rose. Both Japanese government
bond futures and U.S. Treasury futures rose to five-year highs.
                                
 "I'm sure we'll see one or two other victims," said Angus
Gluskie, portfolio manager at White Funds Management in Sydney.
                                
 "It shows that banks were holding lots of exposure to
difficult areas and in the end, it has come back to bite equity
holders."
                                
 The MSCI measure of Asian stocks outside Japan
<.MIAPJ0000PUS> dropped 3.2 percent as of 0609 GMT, after
earlier hitting its lowest since Aug. 20, 2007. The index is
now down about 20 percent so far this year, a sharp reversal
from five previous years of double-digit gains.
                                
 In an unexpected move before markets opened in Asia, the
Federal Reserve lowered the discount rate it charges on direct
loans to banks and implemented steps to provide cash to a wider
range of financial firms, using tools last used in the Great
Depression. [ID:nN16507166]
                                
 Minutes earlier, JPMorgan Chase & Co <JPM.N> had said it
would buy Bear Stearns <BSC.N> for a rock-bottom price of $2 a
share, valuing the U.S. investment bank at the centre of a
widening global credit crisis at about $236 million.
[ID:nN16710089]
                                
 The uncertainty caused futures on the federal funds rate to
soar, fully pricing in a 1 percentage point rate cut at or
before the Fed's policy meeting on Tuesday. [ID:nN16513485]
                                
 "Desperate times need desperate measures. The Federal
Reserve is doing what it takes to restore stability and if it
means cutting the discount rate on a Sunday night in the U.S.,
then so be it," said Craig James, chief equities economist at
Commesec in Sydney.
                                
 Financial companies were hammered, including Mitsubishi UFJ
Financial Group <8306.T> and South Korea's biggest lender
Kookmin Bank <060000.KS>.
                                
 The shockwaves in Asia prompted government leaders to say
they are monitoring the developments in the financial sector.
                                
 "We are only at the beginning stages of a crisis. It's
totally impossible to forecast the world economy. I think,
maybe, a world economic crisis is just beginning," South Korean
President Lee Myung-bak said on Monday, according to a pool
report.
                                
 PAINFUL 2008
                                
 Japan's Nikkei average <.N225> dropped 3.7 percent, hitting
earlier its lowest since August 2005, with exporters such as
Toyota Motor Corp <7203.T> sinking along with the U.S. dollar.
                                
 Elsewhere in Asia, shares in Hong Kong <.HSI> and India
<.BSESN> fell around 4 percent each, while Australian stocks
<.AXJO> fell 2.3 percent.
                                
 Stocks in South Korea <.KS11>, Taiwan and Singapore fell a
little under 2 percent.
                                
 Asian stocks are suffering from a painful 2008 as subprime
and credit-related writedowns in the global financial sector
are happening at a time when the U.S. economy is widely
expected to be in or about to enter a recession.
                                
 The twin effects are having a knock-on effect from Bangkok
to Tokyo.
                                
 Local currencies are strengthening in line with the
slumping dollar, denting the growth outlook for the
export-dependent region, while surging food and energy prices
are hitting the pocketbooks of Asian consumers.
                                
 That is leaving central banks in a bind as they must deal
with slowing economic growth but rising inflation.
                                
 DOLLAR SINKS, GOLD SOARS
                                
 Speculation of joint global central banks interventions hit
markets as the U.S. currency plunged 3 percent against the yen
<JPY=> at one point to hit its lowest since 1995 before clawing
back to around 96.8 yen.
                                
 The euro <EUR=> vaulted to a record $1.5905 <EUR=> against
the dollar, but then retreated to $1.5850.
                                
 Spot gold <XAU=> surged more than 3 percent to a record
$1,030.80 an ounce, buoyed by the dollar's weakness and a
bid-to-safety. Bullion was last traded at $1,024.40.
                                
 Oil jumped to its latest record as well, with crude for
April delivery <CLc1> up at 89 cents at $111.10 a barrel, off a
peak $111.42 hit earlier in the session.
                                
 Investors opted for other asset classes perceived to be
safer, with Japanese June 10-year futures <2JGBv1> jumping a
five-year high, and last traded at 1.43 point to 141.70. ((For
the state of play of Asian stock markets please click on:
<0#.INDEXA>))
 (Editing by Louise Heavens)