* Asian shares hit 3-mth low; Nikkei flirts with 26-year
low
* Financials routed; Nomura down 9.3 pct on share sale news
* Asian emerging currencies fall; S.Korean won routed again
* Dollar hits 3-month high vs yen; gold also seen favoured
(Updates throughout, adds European stock market expectations)
By Rafael Nam
HONG KONG, Feb 24 (Reuters) - Asian shares fell to a
three-month low on Tuesday and Japan's Nikkei index flirted
with a 26-year low, as concerns grew about the global financial
system, helping send safe havens such as the dollar higher.
Strong gains in Asian shares on Monday were 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.
European shares were seen sliding as well, extending a
global rout that on Monday sent the Dow Jones industrial
average <> and the S&P 500 indexes to 12-year lows.
Emerging Asian currencies continued their recent falls,
with the South Korean won pounded again by fears about tight
credit conditions amid the weakest global economy in decades.
"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> is in talks
with U.S. officials for more aid, while in France the
government is expected to provide more funding to two mutually
owned banks. See []
But policymakers have yet to convince investors they can
successfully tackle the global financial woes that have ignited
a worldwide recession.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> dropped at one point to its lowest since Nov.
26, and was down 2.3 percent as of 0645 GMT, thus erasing its
1.7 percent gain on Monday.
The gauge is now down about 13 percent for the year, and
about 10 percent above its post-financial crisis low of 194.03
hit in November 21, which had marked a five-year low.
Japan's Nikkei average <> slid 1.5 percent,
threatening to breach levels that would put it at its lowest
since 1982.
Banking and financial shares led the declines across Asia.
Shares in Japan's Nomura Holdings <8604.T>, the country's
biggest brokerage, slumped 9.3 percent after it announced a big
share sale to shore up its balance sheet.
U.S. regulators on Monday reinforced their willingness to
provide extra funds to financial institutions that need them,
as they look to begin assessing major institutions' capital
needs on Wednesday under a new "stress test" program.
[]
But any new government assistance to Citigroup could fuel
speculation that Washington will need help other lenders as
well, while doubts remain about government efforts to stabilise
the plunging housing market, where the credit crisis began.
Key indexes in Seoul <>, Hong Kong <> and Shanghai
<> dropped more than 3 percent each, while Singapore
<.FTSTI>, Taiwan <>, and India <> fell around 1
percent each.
EMERGING CURRENCY HIT
Market uncertainty stands to benefit safer assets such as
gold, which was range-bound on Tuesday but is expected to at
some point surpass the record $1,030.80 hit last March,
analysts said.
"Despite the correction going on, it is clear that gold is
the only class of assets investors can put their money in,"
said Tatsufumi Okoshi, senior economist at Nomura Securities
Co's financial and economic research centre in Japan.
"Stocks are hit hard, other commodities are down, and an
expected fall in bond prices keeps new money from flowing into
bonds," he said, referring to a glut of global government debt.
Emerging Asian currencies have been hit hard by the market
turbulence. The won <KRW=> fell as low as 1,514.9 per dollar,
down about 1.7 percent from Monday and bringing its losses so
far this year to nearly 17 percent.
The won has been hit hard by a collapse in Asian exports
and the economy's reliance on short-term overseas debt that
needs to be refinanced amid tough market conditions.
Still Asian currencies have fared less badly than in parts
of emerging Europe, which led central European policymakers to
take the unprecedented step of joint verbal intervention on
Monday to support their currencies. []
The dollar rose as high as 95.23 yen <JPY=> as of midday,
marking its highest against the Japanese currency since Dec. 1
and putting its move up 0.7 percent on the day.
The euro was range-bound at around $1.2715 <EUR=> compared
to late U.S. trade on Monday.
The weak outlook for global demand also continued to
undermine oil prices, sending oil futures <CLc1> down 32 cents
to $38.11 a barrel, extending declines from the previous
session.
Gold <XAU=> recovered from earlier falls to stay
range-bound at $991.00 an ounce.
