Asian stock markets resume slide after U.S. rout

Asian stock markets resumed their downward slide Friday after Wall Street fell to its lowest levels in more than 12 years amid deepening fears about the fate of General Motors Corp. and major financial companies.

The region's retreat marked a return to the selling that had gripped global equities markets until a brief rally earlier this week on hopes China would announce major new stimulus measures.

Investors, already deflated after Beijing failed to deliver, were forced to grapple with a warning from General Motors that the struggling automaker may have to file for bankruptcy.

Along with growing uncertainty about the financial system, the news led to yet another rout in U.S. markets, with banking stocks suffering some of the steepest drops. Citigroup Inc., still reeling despite billions of dollars in government aid, fell below $1 a share.

"You can buy Citi at the 99 cent store now," said Paul Schulte, a chief Asia equity strategist at Nomura International in Hong Kong. "It's nauseating. We keep grasping at straws to find hope, and the markets keep punishing us."

Investors also were holding back ahead of what is expected to be an especially bleak U.S. employment report later Friday.

Economists surveyed by Thomson Reuters/IFR predict the Labour Department will report that U.S. employers slashed 648,000 jobs in February more than the 598,000 cut in January.

Every major Asian market traded into the red, though the losses were somewhat more muted than the sharp declines in the U.S.

Japan's Nikkei 225 stock average fell 260.39 points, or 3.5 per cent, to 7,173.10, while Hong Kong's Hang Seng shed 289.72, or 2.4 per cent, to 11,921.52. South Korea's Kospi was off 0.3 per cent at 1,055.03.

Elsewhere, Shanghai's benchmark swooned 1.3 per cent, Australia's stock measure was 1.4 per cent lower and Singapore's key index shed 0.8 per cent.

Trying to buoy sentiment

China has become a growing source of hope for many investors, helping buoy sentiment in Asia at a time when the region's export-driven economies are hurting as demand dries up in industrial Western countries.

A day after Beijing stopped short of announcing new stimulus plans, the government said Friday it sees signs economic growth is recovering and is watching closely to determine whether it needs to expand its huge stimulus effort.

"It really depends on the changing situation to determine whether we need additional investment," Zhang Ping, the chairman of the country's planning body, said in Beijing. He and central bank Gov. Zhou Xiaochuan said positive data showed Beijing's policies were working so far.

Overnight in the U.S., the Dow fell 281.40, or 4.1 per cent, to 6,594.44, its lowest close since April 1997.

Broader indicators also tumbled. The S&P 500 index dropped 30.32, or 4.3 per cent, to 682.55, its lowest close since September 1996.

Sentiment was shaken after GM said auditors raised serious doubt about its ability to continue operating. It's already received $13.4 billion in federal loans, and is seeking a total $30 billion from the government.

As long as global companies are afflicted by huge capital shortages, stock markets are likely to languish or grind downward, analysts say.

But how long it takes the world's GMs and Citigroups to stop hemorrhaging money and raise more capital through government aid and other means is far from clear to anyone.

"I think the markets are going to continue to tread water," said George Kanaan, managing director at UBS in Sydney. "All the companies need to get more capital and that's going to hold markets relatively down until we go through the process."

Wall Street was headed for a slightly higher open as stock futures traded higher. Dow futures were up 14 points, or 0.2 per cent, at 6,645 while S&P500 futures rose 3.5, or 0.5 per cent, to 689.60.

Oil prices were slightly higher in Asian trade, with benchmark crude for April delivery up four cents at $43.65 a barrel by late afternoon in Singapore on the New York Mercantile Exchange. The contract fell $1.77 overnight to settle at $43.61 a barrel.

In currencies, the dollar fell 97.22 yen from 98.20 yen. The euro traded higher at $1.2690 from $1.2548.