* Asian shares fall 3 pct, nears 2009 low
* U.S. stock futures slide on Obama inauguration day
* Sterling hits 7-year low vs dollar; yen up on risk
aversion
* Some regional bonds gain on safe-haven bids
By Rafael Nam
HONG KONG, Jan 20 (Reuters) - Asian shares slumped on
Tuesday on concerns that increasing woes in the global
financial sector will deepen the world's economic downturn,
highlighting the difficulties confronting incoming U.S.
President Barack Obama.
The tumble came after Royal Bank of Scotland <RBS.L> on
Monday unveiled the biggest loss in U.K. corporate history, and
after Britain launched a second bank rescue plan that failed to
restore confidence in the wobbly financial sector. []
Sterling fell to its lowest in almost seven years and the
euro dropped to a six-week low, while U.S. stock futures
slumped, signalling a potentially tough day ahead for Wall
Street.
The spreading caution benefited assets seen as safer, such
as the Japanese yen <JPY=> and regional bonds.
"The market is refocusing on the bigger global picture,"
said Justin Gallagher, head of Sydney sales trading at ABN
AMRO, pointing as well to expectations for weak corporate
earnings results in coming weeks.
"Clearly the market today continues to factor in more
disappointment and certainly, despite the inauguration of Obama
... the market is looking past that now and realising just how
big a mess the global economy is in," he said.
The MSCI index for Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> slid 3 percent as of 0240 GMT, close to the
2009 low. The index is now down nearly 9 percent so far this
year, after it fell in 2008 by 53 percent -- its biggest
decline on record.
The revival in risk aversion is reining in a rally in Asian
shares that had seen the MSCI index surge as of Jan. 7 by 37
percent from five-year lows hit in late November.
Asian banking shares from HSBC <HSBA.L> <0005.HK> to
Japanese top lender Mitsubishi UFJ Financial Group <8306.T>
were among the leading decliners in the region as worries
intensify about a sector facing more credit and loan-related
writedowns.
Japan's Nikkei <> dropped 3.1 percent. Indexes in Hong
Kong <> and Australia <> fell more than 3 percent,
while markets in South Korea <>, Taiwan <> and
Singapore <.FTSTIL fell more than 2 percent each.
U.S. stock futures slid, with March S&P 500 futures <SPc1>
down 13.1 points, or 1.5 percent. Dow Jones futures <DJc1> fell
1.3 percent.
Governments worldwide are grappling with how to get their
banks lending again to revive economies, despite already
injecting billions of dollars and implementing other measures
such as backing some of their debt.
Royal Bank of Scotland said on Monday it was on course to
report a 2008 loss of up to 28 billion pounds ($40.45 billion),
leading the U.K. government to increase its stake in the lender
to nearly 70 percent. []
Central banks have cut interest rates sharply in a bid to
spark growth, but even that has failed to comfort investors.
Britain threw its troubled banks their second lifeline in
three months on Monday and gave the Bank of England a green
light to pump cash into the ailing economy, but the
FTSEurofirst 300 <> index of top European shares fell 1.6
percent to its lowest close since Nov. 21. []
RATING DOWNGRADES
Obama will be inaugurated as U.S. president later in the
day, and his administration is expected to quickly roll out a
hefty stimulus package and a revived plan to buy bad bank
assets.
European governments are passing spending measures of their
own, but the ensuing impact on their budget deficits are
leading some credit agencies to cut sovereign ratings.
Spain on Monday became the second euro zone country after
Greece to have its credit rating downgraded by Standard &
Poor's in less than a week. []
The downgrade, combined with worries about the financial
sector, sent the euro lower. The currency fell 0.5 percent from
late trade on Monday to $1.3010 <EUR=> and earlier hit a
six-week low of $1.2988 on trading platform EBS.
The pound, which fell after the British government
announced its latest rescue package, extended its losses on
Tuesday to slide to $1.4247, its lowest level since March 2002.
The flare up in risk aversion benefitted assets seen as
safer in volatile times. Against the Japanese currency,
sterling tumbled 1.6 percent to 128.90 yen <GBPJPY=R>,
threatening 14-year lows below 128.77 yen hit earlier this
month.
Regional bonds also benefitted from investor caution. March
10-year Japanese government bond futures rose 0.12 point to
139.66 <2JGBv1>, near a four-month high of 140.19 hit last
week.
Australian bond futures gained as well, supported by
expectations for interest rate cuts in the near term as policy
makers work to avert a recession. Three-year bond futures
<YTTc1> rose 0.085 points to 96.880 points, and 10-year bond
futures <YTCc1> added 0.045 points to 95.995 points.
Commodities have been another big loser since the second
half of last year, though U.S. crude futures <CLc1> were steady
at $34.39 on Tuesday.
Oil prices fell nearly $2 in electronic trade on Monday
after Russia and Ukraine signed a gas deal to end a dispute and
22 days of fighting in the Gaza Strip was halted with
separately declared ceasefires by Israel and the Islamist group
Hamas.
