TOKYO : Asian stock markets ended mostly weaker Monday, hit by heavy losses on Wall Street after a surprise drop in US payrolls sparked fears the world's largest economy may be heading for recession, dealers said. But the region's bourses finished well off their lows for the day, while some, such as Shanghai and Hong Kong, managed to end in positive territory.
Investors are now pinning their hopes on a Federal Reserve interest rate cut to shield the economy from the fallout from the US housing slump, dealers said.
"All eyes remain on the US where the market has already priced in a rate cut - the question is just how much," said Macquarie Private Wealth Management private client adviser Joseph Youssef in Sydney.
Hope of a US rate cut helped the main European bourses to eke out modest gains at the start of the week after steep falls on Friday.
But many Asian stocks suffered losses after US and European markets were rattled Friday by news that the US economy lost 4,000 payroll jobs in August, the first decline in four years and far below market expectations.
"US employment has been growing for the past four years so the fall was pretty scary," said Hirokazu Fujiki, equity strategist at Okasan Securities.
"At the same time what is supporting stocks is expectations for a cut to the Fed funds rate on September 18. Investors are waiting ahead of developments in the United States. That's why there wasn't a shock sell-off," he added.
The US payrolls report stoked fears of a US recession, despite assurances from the Fed that the economy was holding to a modest growth rate and that the slump in housing had been contained, dealers said.
"The US employment data reinforced investor uncertainties about the future course of the US economy on top of ongoing worries about sub-prime loans," said Katsuhiko Hiroshige, a market analyst at Traders & Co.
Investors hope that the US can avert a recession if the Fed acts swiftly and aggressively to lower borrowing costs, which could help ease the housing crisis and the credit squeeze.
The federal funds rate now stands at 5.25 percent.
Adding to the jitters about the health of the global economy, Japan said its economy shrank by 0.3 percent in the three months to June from the previous quarter as firms cut spending on new factories and equipment.
Japanese share prices closed down 2.2 percent in with exporter shares particularly hard hit after the dollar slumped against the yen and other currencies on news of the US job losses.
Elsewhere, Sydney ended 1.4 percent lower, Seoul gave up 2.6 percent, Taipei slipped 0.9 percent and Wellington dipped 0.2 percent.
Manila declined 1.6 percent, Singapore slid 1.4 percent, Kuala Lumpur lost 1.1 percent and Jakarta ended 1.4 percent lower.
But in Shanghai Chinese share prices closed 1.5 percent higher as strong prospects for the auto industry sparked a late turnaround, dealers said.
And Hong Kong share prices closed 0.1 percent higher Monday as strong gains in the local stock market operator helped a recovery from early losses on worries over the US economy, dealers said. - AFP/ch
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