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Asia stocks dive to 4-year lows on recession fears

(Agencies)
Updated: 2008-10-27 14:33

Policy Firepower? 

The actions by Asian policy makers come days ahead of a widely expected interest rate cut of 50 basis points by the US Federal Reserve on Wednesday and the US advance report on third-quarter economic growth due on Thursday.

Stock traders on the Tokyo Stock Exchange gaze at digital indicator as Japan's key stock index nose-dived 9.6 percent on a rising yen and growing recession fears in Tokyo Friday, Oct. 24, 2008. [Agencies]

Few expect the sinking global economy to recover quickly despite moves by central banks to cut rates, or government efforts that have so far included pledging about $4 trillion to support banks and thaw frozen credit market.

Emerging markets have been hit especially hard in the global sell-off. Several more countries are expected to turn the International Monetary Fund after Ukraine on Sunday agreed on a $16.5 billion loan package to ease the effects of the financial crisis.

Investors have thus looked for safer havens, or to other asset classes that have recently outperformed, while dumping those deemed as riskier.

Gold gained to $734.95 an ounce compared to $731.50 in late New York trading on Friday, paring earlier strong gains.

The Group of Seven big industrialized economies said on Monday that a rapid rise of the yen against other currencies was bad for both markets and the economy and that it would watch developments and cooperate accordingly.

The yen slipped slightly as traders pondered whether the G7 statement could be a precursor to official intervention in major currencies to stem the sharp surge in the yen.

The currency in the world's second-largest economy has gained as many market players have rushed to unwind carry trades built up over the last several years in which they borrowed the yen to invest in higher-yielding assets.

The dollar edged up to 94.05 yen from near 93.60 after the comments, holding off a 13-year low of 90.87 yen hit on Friday. The euro rose to 118.30 yen from 117.65 yen.

Oil was range-bound at near $64 a barrel on Monday, stopping a slide that saw crude tumble $4 to a 16-month low despite an emergency production from OPEC.

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