Asian Stocks Sink as US Economy Wilts

Asian stocks have fallen again, as markets feel the pressure of a faltering world economy. The latest slide in shares has been prompted by more gloomy financial data from the United States. From Sydney, Phil Mercer reports.

Another miserable day on Asian markets was sparked by more news that the American economy continues to falter.

In the United States, the National Bureau of Economic Research says the country went into recession a year ago. Adding to the gloom was data that indicated that U.S. factory activity dipped to a 26-year low in November.

Asian markets slumped as a result.  In Japan, the Nikkei lost more than six percent of its value. There were falls in Hong Kong, Singapore, Taiwan, South Korea and the Philippines.

In Tokyo, shares in one of the world's biggest steel makers, JFE Holdings, lost almost a tenth of their value.

Markets in Australia followed the regional trend downwards, despite another sizable cut in interest rates, to 4.25 percent.

Economists in Australia say the reduction failed to revive ailing local stocks, because the anticipated cut had already had been largely factored in to the market.

Despite a subdued reaction, analyst Stephen Halmarich says the Reserve Bank of Australia's decision will help to lift the gloom.

"We see that as a very positive sign for the outlook for the economy, but clearly they are concerned that the global outlook is so negative and financial markets are so fragile that they need to move as quickly as they have," he said.     

Australia's economy is not expected to go into recession. However, a slowdown is widely anticipated, with unemployment likely to rise.

Next week, the Australia government starts its multi-billion dollar spending package that is designed to stimulate growth. Pensioners and families are to be given one-off payments of up to (US)$1,300, to help fuel consumer demand.

The Bank of Japan is also trying to rebuild confidence with a range of measures, including a new lending scheme.

Jitters in the markets may take time to dispel. Monday, the Dow Jones industrial average plummeted almost eight percent, wiping out more than half of last week's big gains.