Asian stocks, dollar dip on bailout plan concerns

Singapore: Asian stocks mostly fell and the US dollar dipped against major currencies on Thursday, pressured by doubts over the US government's $700 billion bailout plan and fears over the economic fallout from the crisis.

European stocks opened slightly firmer, with the FTSEurofirst 300 index edging up 0.2 per cent in early trade as investors awaited the outcome of an emergency meeting of US policymakers later in the day.

Gold gained, rising toward Tuesday's seven-week high, and short-term government debt prices climbed on concerns the US bank rescue may be de-railed or insufficient to deal with the turmoil.

The euro jumped nearly 1 percent from late US trade to around $1.4750 by 0648 GMT while dollar fell slightly against the yen.

"The bailout offers some respite for the financial sector but does little to change the economic outlook, which continues to deteriorate," said Dwyfor Evans, currency strategist at State Street Global Markets in Hong Kong. "If the bailout plan disappoints in the coming days it should give a boost to the yen's safe-haven status relative to the dollar," he said in a note.

Warren Buffett's $5 billion bet on Goldman Sachs and the Federal Reserve's new currency swap lines with more central banks helped restore some investor confidence in the dollar, but the buying interest was still limited by worries about the US economy, analysts said.

Uncertainty

Uncertainty about the $700 billion bailout plan also weighed on stocks, with the MSCI index of Asia-Pacific stocks outside of Japan falling 0.7 per cent, though it remained well above a two-year low hit last Thursday.

Japanese shares also lost ground, with the Nikkei average falling 0.9 per cent.

But Chinese stocks rose nearly 4 per cent, bouyed by share buybacks by state-owned firms and hopes on market reforms, which also supported Hong Kong stocks.

The US bailout package unveiled late last week triggered a temporary rally in global stocks but concerns over when Congress will approve the plan and uncertainty about its final form quickly eclipsed that optimism.

Congress looked close to reaching a deal to approval the bailout plan and President George W. Bush called an emergency meeting for Thursday to hammer out details. Bush administration officials warned an angry Congress the US financial system would sink into Great Depression-style chaos unless it passed the bailout plan.

A bleak assessment of the US economic outlook from Fed Chairman Ben Bernanke on Wednesday bolstered the view the US central bank. Untitled will lower its benchmark interest rates again by year-end.

The Fed cut its benchmark federal funds rate to 2 per cent from 5.25 per cent in a series of moves starting in September 2007 after the global credit crisis blew up.

Short-term US Treasury debt was in demand, suggesting funding needs once again have moved to the forefront of investors' minds.