REUTERS/Stringer
By Rafael Nam
HONG KONG (Reuters) - Asian shares fell on Thursday to their lowest this month on uncertainty about the U.S. Treasury's banking rescue plan and signs the global financial crisis biting deeper in Asia.
Japan's Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) said it plans to raise fresh capital, while Commonwealth Bank of Australia (CBA.AX: Quote, Profile, Research, Stock Buzz) warned it expected a big jump in bad loans.
The announcements came on a bleak day that also included data showing China's industrial output slumped to a seven-year low, and follows a revenue warning from Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz) and a dismal forecast from U.S. electronics retailer Best Buy (BBY.N: Quote, Profile, Research, Stock Buzz).
European shares were set to tumble as well, with Britain's FTSE 100 .FTSE seen down as much as 2.2 percent.
Deepening gloom about the global economy led crude prices to hit a 22-month low of $55 a barrel. Metals such as platinum also dropped.
The Japanese yen retreated against the euro and the dollar after soaring on Wednesday on a flight-to-quality. Other Asian currencies fell, while Australia's central bank stepped in to support its tumbling Australian dollar.
"There isn't a lot of light right now," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management in Japan.
"With so many grim forecasts and the situation in developing nations growing worse, things are tough."
BAILOUT UNCERTAINTY
The MSCI index of Asian stocks outside Japan .MIAPJ0000PUS dropped 5.4 percent as of 0620 GMT after at one point hitting its lowest level since October 30.
Asian shares followed Wall Street lower after the U.S. Treasury on Wednesday backed away from using a $700 billion bailout fund to buy bad mortgage debt from lenders to focus instead on buying stakes in the U.S. banks themselves.
The shift in focus not only created uncertainty, but came after a raft of recent gloomy economic data worldwide.
Data showed China's industrial output slumped to a seven-year low last month as manufacturers throttled back production in response to weakness in the domestic property market and an unfolding slowdown in export demand.
Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz) also cut its fourth-quarter revenue forecast, citing weak demand across the world for all its products, while Best Buy slashed its profit forecast.
Japan's Nikkei average .N225 dropped 5.3 percent. Other markets also took a beating: South Korea .KS11, Hong Kong .HSI, and Singapore .FTSTI fell 3-6 percent each and Australia sank 5.9 percent to a four-year low.
But Shanghai .SSEC surged 4.3 percent on hopes for a major boost to the economy from fiscal spending and monetary easing.
AUSSIE, RUPIAH SLUMP
The yen retreated from a two-week high against the euro as short-term players locked in profits, though it still retained its overall strength as investors remain wary of riskier assets.
The euro rebounded to 119.20 yen on trading platform EBS, up 0.3 percent from late U.S. trade, after briefly falling as low as 117.65 yen, the lowest since October 28.
The dollar recovered from the day's low of 94.53 yen to 95.54 yen, up 0.5 percent on the day.
Other currencies fared worse. The battered Australian dollar remained on the defensive at $0.6391, after the central bank said it had intervened to support it.
The Indonesian rupiah fell almost 4 percent to hit 11,950 per dollar, its weakest since April 2001, following new government restrictions on foreign exchange purchases.
OIL SLUMPS
Commodity prices crumbled further on concern sputtering economic growth would curb demand for everything from oil to grain and on widespread risk aversion.
U.S. crude futures fell for a third consecutive day, down $1.03 to $55.13, after earlier falling to $55.03 -- the lowest since January 30, 2007.
"Oil prices continue to be pressured by fears that weaker international economic growth will depress oil consumption," said David Moore, an analyst at the Commonwealth Bank of Australia.
Platinum fell as low as a bid of $789.50 but rebounded to $794.00 later in the day, still well below the New York notional close of $810.
But regional government bonds gained from the volatility elsewhere, with Japan's December 10-year JGB futures up 0.42 point to 138.51, after climbing as high as 138.79.
In U.S. Treasuries, the spread between the two-year and the 10-year yields was at around 257 basis points, approaching the 2003 peak of 266 basis points amid the possibility of Japanese and Chinese reserves of Treasuries will be sold to raise cash.
The two-year note was unchanged in price from late New York trade to yield 1.163 percent after hitting 1.145 percent, a five-year low.
The benchmark 10-year note dipped 2/32 in price to yield 3.740 percent from around 3.66 percent.
(Additional reporting by Elaine Lies in TOKYO and Fayen Wong in PERTH; Editing by Lincoln Feast)
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