Asian stocks fall on growth fears

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Most Asian markets shoot up after US stunning rall...Asia stocks at 2-yr low as credit fears biteAsian stocks fall on growth fearsUS economy fears plague stocks, buoy bonds

there are massive growth risks for the Korean economy. The entire household sector and small and medium-sized enterprise sector are hugely leveraged. There is likely to be a downturn in economic growth," said Frederic Neumann, Asia Pacific economist with HSBC in Hong Kong.

Other central banks around the world face the same dilemma -- whether to tighten borrowing conditions now to stem inflation and risk a sharper economic slowdown.

Earlier this week, Indonesia's central bank raised rates by 25 bps for the fourth time this year, but the Reserve Bank of Australia kept its rates on hold.

The US Federal Reserve held rates steady at 2 per cent on Tuesday, expressing concerns about both a slowing economy and rising inflation. The Fed indicated it is in no rush to push borrowing costs higher.

That has helped to spur investors' willingness to take risks, a primary driver in boosting the US dollar to its highest level against the yen in seven months on Wednesday.

The dollar was down 0.1 per cent against the yen at 109.46 yen. The euro edged up 0.1 per cent to around $1.5425 ahead of the ECB's meeting later in the day.

The potential for a global recession was lurking in the minds of many investors.

"All the G7 economies are now in a recession or headed in the short run towards a recessionary hard landing," said Nouriel Roubini, chairman of RGE Monitor, a New York economics research firm, in a blog posting on Wednesday.

"While the world will technically avoid a global recession (defined by the IMF as global growth below 2.5 per cent) it will get quite close to it by mid-2009 as global growth will slow down to a near recessionary 3 per cent."

Japanese government bond futures hit a four-month high on concerns about the outlook for Japan's economy and due to a fall in Tokyo share prices.

September 10-year JGB futures rose as high as 137.46 for a gain of 0.27 point on the day, the highest level for a lead futures contract since late April.