Asia stocks fall as financial crisis rolls on
Asian stocks fell more than 1 percent on Tuesday, after more trouble in the U.S. financial sector, including a ninth bank failure, reminded investors of the frail state of the global economy.
Stocks hurt by signs of U.S. recessionWorries about world growth were fuelled after the International Monetary Fund trimmed global growth forecasts, bolstering the dollar and underpinning safe-haven government bond prices.
Equity markets were pressured after Columbian Bank and Trust turned insolvent late last week. Even Denmark's central bank had to take over one of the country's financial institutions, increasing unease in Asia about the potential ripple effects.
South Korea's top regulator meanwhile warned state-run Korea Development Bank against taking the lead in buying a foreign company. The bank on Friday had said it was open to purchasing an overseas financial institution, naming embattled Lehman Brothers Holdings Inc as one option.
"Concerns about credit risks both in the United States and Japan are still strong. There are also worries about the global economic outlook," said Yukio Takahashi, a market analyst at Shinko Securities in Tokyo.
Japan's Nikkei stock index slid 1.3 percent, approaching a near five-month low touched on Friday. Shares of the country's biggest lender Mitsubishi UFJ Financial Group were down 3 percent.
Outside Japan, stocks in the Asia-Pacific region were off 1.2 percent, within sight of a 17-month low hit on Thursday. Singapore's benchmark Straits Times index sank to a two-year low, down 1.4 percent.
The saga with top U.S. mortgage finance companies Fannie Mae and Freddie Mac turned bittersweet. On the one hand, Freddie Mac easily sold $2 billion in debt on Monday, reassuring the market that the companies can fund their operations without a government bailout.
However, Fannie and Freddie preferred shares have become radioactive. JPMorgan Chase & Co said the market value of its investments in the companies' preferred stock has been halved this quarter to $600 million, showing how the financial crisis is difficult to escape for even one of the least scathed investment banks.
IMF CUTS GROWTH FORECASTS
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