* Uncertainty over U.S. bailout plan weighs on equities
* China stocks jump 3.6 pct on buybacks, market reforms
* Gold and debt firm as credit concerns persist
* Weakening U.S. economy may prod the Fed to cut rates
(Updates with prices, c.bank action, European open)
By Kevin Yao
SINGAPORE, Sept 25 (Reuters) - Asian stocks mostly fell and
the U.S. dollar dipped against major currencies on Thursday,
pressured by doubts over the U.S. government's $700 billion
bailout plan and fears over the economic fallout from the
crisis.
European stocks opened slightly firmer, with the
FTSEurofirst 300 index <> edging up 0.2 percent in early
trade as investors awaited the outcome of an emergency meeting
of U.S. policymakers later in the day.
Gold <XAU=> gained, rising toward Tuesday's seven-week
high, and short-term government debt prices climbed on concerns
the U.S. bank rescue may be de-railed or insufficient to deal
with the turmoil.
The euro jumped nearly 1 percent from late U.S. trade to
around $1.4750 <EUR=> by 0648 GMT while dollar fell slightly
against the yen <JPY=>.
"The bailout offers some respite for the financial sector
but does little to change the economic outlook, which continues
to deteriorate," said Dwyfor Evans, currency strategist at
State Street Global Markets in Hong Kong.
"If the bailout plan disappoints in the coming days it
should give a boost to the yen's safe-haven status relative to
the dollar," he said in a note.
Warren Buffett's $5 billion bet on Goldman Sachs <GS.N> and
the Federal Reserve's new currency swap lines with more central
banks helped restore some investor confidence in the dollar,
but the buying interest was still limited by worries about the
U.S. economy, analysts said.
PRESSURES ON STOCKS
Uncertainty about the $700 billion bailout plan also
weighed on stocks, with the MSCI index of Asia-Pacific stocks
outside of Japan <.MIAPJ0000PUS> falling 0.7 percent, though it
remained well above a two-year low hit last Thursday.
Japanese shares also lost ground, with the Nikkei average
<> falling 0.9 percent.
But Chinese stocks <> rose nearly 4 percent, bouyed by
share buybacks by state-owned firms and hopes on market
reforms, which also supported Hong Kong stocks <>.
The U.S. bailout package unveiled late last week triggered
a temporary rally in global stocks but concerns over when
Congress will approve the plan and uncertainty about its final
form quickly eclipsed that optimism.
Congress looked close to reaching a deal to approval the
bailout plan and President George W. Bush called an emergency
meeting for Thursday to hammer out details. []
Bush administration officials warned an angry Congress the
U.S. financial system would sink into Great Depression-style
chaos unless it passed the bailout plan.
FLIGHT TO SAFETY
A bleak assessment of the U.S. economic outlook from Fed
Chairman Ben Bernanke on Wednesday bolstered the view the U.S.
central bank will lower its benchmark interest rates again by
year-end. []
The Fed cut its benchmark federal funds rate to 2 percent
from 5.25 percent in a series of moves starting in September
2007 after the global credit crisis blew up.
Short-term U.S. Treasury debt was in demand, suggesting
funding needs once again have moved to the forefront of
investors' minds. The yield on the 1-month bill slipped to a
mere 10 basis points, down from 12 basis points late in New
York on Wednesday.
In Asia, the rate on overnight dollar funds <USDOND=> held
steady to 2.5-3.5 percent from a peak of about 10 percent hit
last week, as central banks continued to shore up liquidity.
Australia's central bank pumped extra funds into the local
money market again, Bank of Japan dished out nearly $30 billion
in its first ever dollar-supply operation and China's central
bank let rates in its draining operation drop again,
effectively further relaxing its monetary policy.
Hong Kong's central bank also injected funds into the
market.
"Over the medium term, we expect investors will continue to
look for ways to trim down exposure to risks that are either
excessive or difficult to assess," said Steve Wang, credit
analyst at TriBridge Investment Partners in Hong Kong.
Gold prices rose as far as $891.5 per ounce, up 1 percent
from New York's close on Wednesday while crude oil futures
<CLc1> held steady near $106 per barrel as falling U.S.
inventories were countered by evidence of slowing U.S. demand.
(Editing by Lincoln Feast)
