Asia stocks hit 5-year low

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Asia stocks hit 2-month high2008 - A year of losses at Wall StreetPound hits record low against euroAustralia shares up 1.1 pct; banks lead

Hong Kong, November 21: : Waves of selling in world stock markets crashed into Asia on Friday, with gains from the region's 5-year bull run now erased as a global recession tightened its grip, and investors sought refuge in government bonds and cash. US stocks were at the lowest in more than a decade and oil prices fell to 3-1/2-year lows, trading below $50 a barrel, as commodity prices slumped on expectations of reduced demand as economies from the euro zone to Taiwan contract.

The fate of US corporate titans like General Motors, Ford Motor Company and Citigroup was uncertain, adding to a general mood of anxiety.

Citigroup, not long ago the world's most valuable financial firm, was reportedly considering selling itself.

Democratic congressional leaders demanded executives at the Big Three automakers come up with a detailed business survival plan in exchange for their support of up to $25 billion in loans.

"It's one car crash after another for the markets right now and the risk of global economic recession is deepening by the day," said Martin Slaney, head of derivatives at GFT in Australia.

Investors priced in a 1-in-3 chance that the US Federal Reserve would cut its benchmark interest rate to 0.25 per cent from 1 per cent on or before its last policy meeting of the year on December 16.

A growing number of Fed officials are talking about an unprecedented monetary expansion, with more economists expecting the base rate to hit zero.

Japan's Nikkei share average dropped 2.2 per cent, extending its weekly decline to around 12 per cent.

Stocks in the Asia-Pacific region excluding Japan were down 2 per cent, according to an MSCI index, after earlier slipping to their lowest since October 2003 when global markets were just beginning to recover from the bursting of the dotcom bubble.

The MSCI All-Country World Index fell 0.5 per cent, plumbing the lowest levels since April 2003, having now fallen 53 per cent this year.

Hong Kong's Hang Seng index shed 3 per cent, with widespread weakness most acute in the financial, real estate and commodity-related sectors.

ARE WE THERE YET?

A drop of more than 50 per cent in the S&P 500 US stocks index from its peak, the worst bear market since The Great Depression, has uncovered attractive valuations. Still, economic uncertainty has made value investing tricky business.