GLOBAL MARKETS-Asian shares tumble on financial woes

                                
 * 26-year low in sight for Japan's Nikkei
                                
 * Financials routed; Nomura down 8.6 pct on share sale news
                                
 * Asian emerging currencies extend falls; won hit
                                
 * Dollar dips, but close to 3-month high
                                
 By Rafael Nam
                                
 HONG KONG, Feb 24 (Reuters) - Asian shares fell on Tuesday,
with Japan's Nikkei flirting with a 26-year low, as concerns
grew about the global financial system, while emerging
currencies such as the South Korean won extended their recent
sell-off.
                                
 Strong gains in Asian shares on Monday were completely
erased as optimism over reports that the U.S. government could
take a bigger stake in Citigroup <C.N> gave way to fresh
questions about whether Washington is doing enough to stabilise
the ailing banking and credit sectors.
                                
 Traditional investor havens in times of turmoil such as the
dollar and gold dipped, though analysts predicted these asset
classes could soon resume their recent rallies as the
uncertainty in global markets continues.
                                
 "The problem is not with only one bank or one country.
Investors are losing confidence, seeing U.S. and European stock
markets continue to slide," said Hwang Chang-joong, an analyst
at Woori Investment & Securities in Seoul.
                                
 Problems in the global financial system continue to
multiply as massive credit losses and recession weigh on
lenders.
 American International Group Inc <AIG.N>, which was rescued
twice last year by the U.S. government, is in talks with
officials for more aid, while in France the government is
expected to provide more funding to two mutually owned banks.
See [nCRISIS]
                                
 But policymakers have yet to convince investors they can
successfully tackle the global financial woes that have ignited
a worldwide recession.
                                
 Japan's Nikkei stock average slid 2.6 percent, hurt by
exporters such as Canon Inc <7751.T> and banking shares after
worries about financial system stability sent U.S. stocks to a
12-year low.
                                
 Japanese Finance Minister Kaoru Yosano said the government
was studying measures to support the stock market, as the
Nikkei briefly fell as low as 7,155.16, breaking below the Oct.
27 closing level of 7,162.90, its lowest finish since October
1982. [ID:nT359930]
                                
 Shares in Japan's Nomura Holdings <8604.T>, the country's
biggest brokerage, slumped nearly 9 percent after it announced
a big share sale to shore up its balance sheet.
                                
 The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> dropped 2.3 percent as of 0230 GMT, erasing its
1.7 percent gain on Monday.
                                
 The gauge is approaching its post-financial crisis low of
194.03 hit in late November, which had marked the lowest in
about five years.
                                
 Key indexes in South Korea <.KS11> and Hong Kong <.HSI>
dropped more than 3 percent each, while Singapore <.FTSTI>,
Australia <.AXJO> and Shanghai <.SSEC> fell around 1 percent
each.
                                
 U.S. regulators on Monday reinforced their willingness to
provide extra funds to financial institutions that need it, as
they look to begin assessing major institutions' capital needs
on Wednesday under a new "stress test" program. [ID:nN23331722]
                                
 New government assistance to Citigroup could fuel
speculation that Washington will need to step in to help other
lenders as well, while doubts remain about government efforts
to stabilise the plunging housing market, where the credit
crisis began.
                                
 EMERGING CURRENCY HIT
                                
 Emerging Asian currencies were among the hardest hit by the
continued market turbulence. The won was quoted at 1,509.1/0.1
per dollar as of 0005 GMT, compared with Monday's domestic
close <KRW=KFTC> of 1,489.0.
                                
 South Korean markets have been battered by a collapse in
Asian exports amid the global demand slump, and by the
economy's reliance on short-term overseas debt that needs to be
refinanced in the toughest market conditions in years.
                                
 Still Asian currencies have fared less badly than in parts
of emerging Europe, which led central European policymakers to
take on Monday the unprecedent step of joint verbal
intervention to support their currencies. [ID:nLN571478]
                                
 Among major currencies, the dollar dipped 0.3 percent from
late U.S. trade to 94.34 <JPY=> as some investors booked
profits on the previous day's rally, when the U.S. currency
struck a three-month high of 94.95 yen on trading platform EBS.
                                
 The euro edged down 0.1 percent to $1.2675 <EUR=>, staying
under pressure after European Central Bank President
Jean-Claude Trichet said on Monday the euro-zone financial
system is under severe strain. [ID:nLN456587]
                                
 The weak global demand outlook continues to undermine oil
prices, sending oil futures <CLc1> down 36 cents on Tuesday to
$38.08 a barrel, extending declines from the previous session.
                                
 Gold <XAU=>, which typically benefits during times of
extreme volatility, fell by about $5-$6 to $985.35 an ounce as
investors took profits after a recent sharp rally, while
options-related selling also weighed.
 (Additional reporting by Rhee So-eui in SEOUL; Editing by Kim
Coghill)