ENB:GLOBAL RECESSION (1)

Global recession


Global stocks battered by renewed recession fears
By Natsuko Waki

World stocks hit a five-month low on Friday, prompting safe-haven flows into government bonds as a U.S. financial rescue plan failed to erase fears that the world's
largest economy might already be in recession.
President George W. Bush told lawmakers on Thursday he wanted tax rebates for families and breaks for businesses in an economic aid plan that could total up to
$150 billion.
But that failed to prevent investors from dumping stocks and other risky assets as data on Thursday showed factory activity in the U.S. Mid-Atlantic region
contracted sharply in January and home building in December fell to the slowest pace since early 1990s. The benchmark Wall Street index hit a 15-month low.
The scale of losses by major investment banks hit by the credit crisis became more evident on Thursday after Merrill Lynch (MER.N) reported a fourth-quarter net
loss of $9.8 billion, the largest in the company's history.
"We seem to be entering a bear market and have got to go lower," said Edmund Shing, strategist at BNP Paribas Arbitrage in Paris.
"People seem to be placing a lot of faith in the fiscal package in the United States ... maybe the Democrats and Republicans will agree in short measure on the
package, but I still see some downside regardless."
The FTSEurofirst 300 index was down 0.4 percent, hitting its lowest since September 2006. MSCI main world equity index was down 0.3 percent, having hit a five
-month low.
The dollar managed to rebound against a basket of currencies after hitting a seven-week low this week.
Expectations for aggressive U.S. interest rate cuts this year, starting with at least a 50 basis point easing this month, have undermined the dollar.
Federal Reserve Chairman Ben Bernanke on Thursday threw his support behind efforts to craft an economic stimulus package and repeated that the U.S. central
bank was ready to act aggressively to counter recession risks.
But he specified that it was "critically important" that any fiscal measures be designed to kick in quickly and deliver their maximum impact within the next 12 months.
Any other effect could do more harm than good, Bernanke warned.
Emerging stocks, which had shown resilience at a time the developed asset markets struggled with the credit crisis, failed to outperform, falling by 0.4 percent.
"The market is no longer viewing the U.S. economic slowdown in isolation. Although domestic demand-based emerging growth will provide a counterbalance, a
cyclical global moderation now appears more likely," UBS said in a note to clients.
"In this scenario, we expect the U.S. dollar to strengthen once growth-seeking outflows and diversification pressures subside as investors globally seek to recycle
dollar funds back into U.S. assets."
Emerging sovereign spreads tightened 3 basis points.
The March Bund future was up 15 ticks.
U.S. light crude was up 0.3 percent after falling to one-month lows earlier on concerns over the U.S. economy.
Gold was steady on the day at $876.40 an ounce.
(Additional reporting by Sitaraman Shankar, editing by Mike Peacock)

Once Mighty Britain Tumbles, Its ETF Sinks
Joanne Von AlrothThu Jan 17, 5:33 PM ET

Oh, how far the mighty have fallen.
Last year, the United Kingdom was still coasting on an uninterrupted growth cycle that began in 1992. It averaged annual GDP growth of 2.5% for years. In
September, the British pound hit a high of $2.03. Many expected the British economy to kick into overdrive and reach a 3% increase for 2007.
Then came the credit crisis, a troubled housing market and a reduction in consumer spending. British residents depend more heavily on credit than even U.S. citizens,
and they're hurting. The pound has slipped and economists' outlook on the British economy has become as perky as a cold, rainy London day.
In the world of exchange traded funds, iShares MSCI United Kingdom Fund recently has been bearing the weight of the slump.
Assets
This almost 12-year-old exchange traded fund has $1.2 billion in assets and tracks the performance of the MSCI United Kingdom Index. It returned nearly 30% in
2006. Thanks to the rough financial waters toward the end of 2007, though, its return was just 8% last year.
While single-country funds tend to be risky, this fund has been doing particularly poorly of late.
What happened? High oil prices helped keep British inflation at an annual rate of 2.1% in November, higher than the Bank of England's 2% target. The retail sector
also has been hit hard, after experiencing what retailers called the worst Christmas season in years. The Bank of England last week froze interest rates at 5.5% in
anticipation of slowed economic growth and higher inflation. Of the fund's 155 holdings, several have been a big drag on performance. Hardest hit, not unexpectedly,
are those in the financial field.
Banks Going Down
Royal Bank of Scotland , the fund's eighth-largest holding, has been diving since Oct. 31. The bank's shares fell more than 3% Thursday on fears it might follow U.S.
banks and raise more equity to shore up its capital base.
HSBC Holdings , the fund's third-largest holding, also is a laggard. The bank's stock plummeted Tuesday to a 26-month low after a research report estimated the
banking giant would have to write off $13 billion for subprime losses. Goldman Sachs this week downgraded the financial giant to a "conviction sell."
British officials are turning to other nations to help stem the flow of red. On Thursday, U.K. Chancellor of the Exchequer Alistair Darling was expected to meet with
the financial ministers of France, Germany and Italy and push for more international coordination on anticipating and responding to turbulence in financial markets.
Oil slipped to $90 a barrel this week, which hurt the fund's largest holding, BP , and its fourth-largest holding, Royal Dutch Shell . BP was downgraded this week to
neutral.

Bush to lay out economic stimulus ideas
By ANDREW TAYLOR, Associated Press Writer

President Bush is putting together his first public call for an emergency fiscal stimulus bill while negotiations on Capitol Hill focus on rebates for taxpayers and other
steps to jump-start the sagging economy.
Bush planned to lay out his position Friday, but he wasn't expected to go into specifics. Press secretary Dana Perino said Bush would demand that any package be
effective, simple and temporary — mirroring calls by Democratic lawmakers for a "timely, targeted and temporary" stimulus measure.
Taxpayers could receive rebates of up to $800 for individuals and $1,600 for married couples under a White House plan. Although lawmakers were considering
smaller rebate checks and more money for food stamp recipients and the unemployed, Bush told congressional leaders that he favors income tax rebates for people
and tax breaks for business investment.
Federal Reserve Chairman Ben Bernanke entered the stimulus debate Thursday, endorsing the idea of putting money into the hands of those who would spend it
quickly and boost the flagging economy.
The scramble to take action came as fears mounted that a severe housing slump and a painful credit crisis could cause people to clamp down on their spending and
businesses to put a lid on hiring, throwing the country into its first recession since 2001.
Aides to lawmakers involved in the talks said the White House also wants to eliminate the 10 percent income tax bracket for one year and issue a rebate within
months. Advocates for the poor said that tens of millions of people in lower income ranges would be left out or not fully feel the benefit of the White House plan.
Lawmakers were instead discussing a $500 rebate for individuals, the aides said, with details for couples and people with children still being negotiated.
The rebates would likely be limited to individuals with incomes of $85,000 or less and couples with incomes of $110,000 or less, the aides said, speaking on
condition of anonymity because no final decisions had been made.
The president did not push for a permanent extension of his 2001 and 2003 tax cuts, many of which are due to expire in 2010, officials said. That would eliminate a
potential stumbling block to swift action by Congress, since most Democrats oppose making the tax cuts permanent.
Bernanke voiced his support for a stimulus package in an appearance before the House Budget Committee. He stressed that it must be temporary and must be
implemented quickly — so that its economic effects could be felt as much as possible within the next 12 months.
"Putting money into the hands of households and firms that would spend it in the near term" is a priority, he said.
Especially important is making sure a plan can put cash into the hands of poor people and the middle class, who are most likely to spend it right away, he said, though
he added that research shows affluent people also spend some of their rebates.
Bernanke declined to endorse any particular approach, but he did say he preferred one that would not have a long-term adverse impact on the government's budget
deficit.
Senior aides to House Democrats and Republicans said in addition to included tax rebates for individuals, the emerging measure would contain tax breaks for
businesses investing in new equipment, increases in food stamps, and higher unemployment benefits. They spoke on condition of anonymity, since the talks are
ongoing and lawmakers have promised not to reveal details.
House Speaker Nancy Pelosi said she wanted legislation enacted within a month and said the government must "spend the money, invest the resources, give the tax
relief in a way that again injects demand into the economy, puts it in the hands of those who need it most and into the middle class ... so that we can create jobs."
For now, Bernanke was hopeful the country could skirt a dangerous downturn.
"We're not forecasting recession but, rather, at this point, slow growth," he told lawmakers. Still, the toll of the housing and credit debacles will be felt into early next
year, he added.

U.S. Economy: Inflation Slows, Production Unchanged (Update3)
By Courtney Schlisserman
Jan. 16 (Bloomberg) -- Consumer prices in the U.S. rose at a slower pace in December and industrial production failed to grow, giving the Federal Reserve the
room and reason to cut interest rates at its next meeting on Jan. 30.
The cost of living increased 0.3 percent after a 0.8 percent gain in November, the Labor Department said today in Washington. Output at U.S. factories was
unchanged in December as exports helped make up for declines in auto and housing- related production, the Federal Reserve said separately.
Slower growth will make it more difficult for companies to pass on higher costs, suggesting inflation will cool from last year's pace, the fastest in 17 years, economists
said. Investors' attention may now shift to Chairman Ben S. Bernanke's testimony on the economy tomorrow at a hearing in Congress.
``With the sluggish growth outlook and rising risk of recession, inflation concerns have receded,'' said Zach Pandl, an economist in New York at Lehman Brothers
Holdings Inc., which correctly forecast the increase in prices. ``The Fed is clearly focusing on growth at this point.''
Economists had anticipated a 0.2 percent increase in consumer prices last month, according to the median forecast in a Bloomberg News survey.
Prices excluding food and energy advanced 0.2 percent, after a 0.3 percent increase, matching the median estimate.
Treasury notes were little changed after the reports and later fell. The yield on the benchmark 10-year note was 3.70 percent at 1:03 p.m. in New York, compared
with 3.67 percent late yesterday. Most stocks rose better-than-estimated results at JPMorgan Chase & Co. and Wells Fargo & Co. spurred confidence that banks
will rebound from credit-market losses.
Builder Confidence
Homebuilder confidence held near a record low in January, signaling the housing recession will persist for much of 2008, a private report also showed. The National
Association of Home Builders/Wells Fargo index of builder sentiment rose to 19 from a reading of 18 in December that was lower than previously estimated, the
Washington-based group said. Levels less than 50 mean most respondents view conditions as poor.
Capacity utilization, which measures the proportion of plants in use, fell to 81.4 percent from 81.6 percent in November, indicating greater slack in the economy, the
Fed's report showed. Economists had predicted a 0.2 percent drop in output and a capacity-in-use rate of 81.2 percent.
Fed Action
``There is nothing that would keep the Fed from cutting 50 to 75 basis points later this month,'' based on today's data, said Michael Woolfolk, senior currency
strategist at the Bank of New York Mellon Corp. in New York.
Traders anticipate the Fed will cut its benchmark rate to 3.75 percent, from 4.25 percent, this month, futures prices show. The chance of a 75 basis-point cut was 42
percent. Policy makers are next scheduled to gather Jan. 29-30. A basis point is 0.01 percentage point.
For all of last year, consumer prices rose 4.1 percent, the most since 1990. The core rate climbed 2.4 percent after a 2.6 percent increase in 2006.
Energy prices last month rose 0.9 percent, after gaining 5.7 percent the previous month. Fuel costs were up 18 percent in 2007, also the most in 17 years.
Food prices, which account for about one-fifth of the CPI, increased 0.1 percent, the smallest gain of any month in 2007.
The consumer price index is the government's broadest gauge of costs for goods and services. Almost 60 percent of the CPI covers prices that consumers pay for
services ranging from medical visits to airline fares and movie tickets.
Wholesale Prices
The government yesterday said producer prices unexpectedly eased 0.1 percent at the end of a year that saw the biggest annual jump in more than a quarter century.
The cost of imported goods was unchanged in December, a report last week showed.
PPI and CPI have some differences in timing that may cause discrepancies. In calculating wholesale prices, the government asks survey participants to report costs as
of the Tuesday of the week that includes the 13th. Consumer prices are based on average costs over the entire month.
Rents, which make up almost 40 percent of the core CPI, rose 0.3 percent.
``We do not think this precludes the Fed from taking significant rate cut action at the January'' Fed meeting, said Sam Bullard, a senior economist at Wachovia Corp.
in Charlotte, North Carolina. ``If we see demand softening, which is what most economists believe will happen in the first half of the year, that will definitely reduce
firms' abilities to raise prices.''
Growth Forecasts
The economy will expand at an average 1.5 percent pace in the first half of this year, the same as forecast for the fourth quarter, according to the median estimate in a
Bloomberg News survey taken earlier this month.
Bernanke and several of his colleagues last week said they are growing more concerned about growth. Bernanke pledged ``substantive additional action'' to ensure
against ``downside risks'' to the economic expansion.
The Fed chief testifies to the House Budget Committee on the economic outlook tomorrow from 10 a.m. in Washington.
Some merchants are already cutting prices to try to lure buyers. Williams-Sonoma Inc., the U.S. gourmet-cookware retailer, yesterday reduced its fourth-quarter
profit forecast following an unexpected decline in holiday sales. The San Francisco-based company said it marked down merchandise and offered cheaper shipping
at its Pottery Barn.
This year may be ``increasingly challenging,'' Chief Executive Officer Howard Lester said in the statement.
Those manufacturers facing less price-sensitive demand are trying to pass rising costs to consumers. General Mills Inc., the second-largest U.S. cereal maker, this
week said it expects to raise prices later this year to recovering higher dairy and wheat costs.
The Minneapolis-based company raised prices on such products as Yoplait yogurt and Pillsbury refrigerated dough on Nov. 1 following increases earlier in the year.

Last Updated: January 16, 2008 13:05 EST
Japan Economy, No Longer `Top-Ranked,' Is Losing Edge, Ota Says
By Toru Fujioka
Jan. 18 (Bloomberg) -- Japan's economy is losing its competitive edge and the government needs to find ways to spur growth, Economic and Fiscal Policy Hiroko Ota said.
``The economy can no longer be called top-ranked,'' Ota said in a speech at the parliament in Tokyo today. ``We haven't come up with a framework to sustain
economic growth.''
Japan's ratio of gross domestic product per person fell for a sixth year to 18th among the 30-member Organization for Economic Cooperation and Development in
2006. The country's share of the global economy shrank to the lowest on record, according to a Cabinet Office report last month.
Growth prospects would improve if the government increases the number of trade agreements with other countries and finds ways to boost foreign direct investment
and tourism, Ota said.
Japan's economy, the world's second largest, is still enjoying its longest postwar expansion, Ota said, adding that stagnant wages have delayed the spread of growth
to consumers.
She also reiterated that the government wants to balance the budget by 2011, even after a report issued by the Cabinet Office yesterday showed it would probably
miss the target.

Last Updated: January 18, 2008 00:04 EST
Japanese finance minister urges markets to be calm
01.17.08, 9:53 PM ET TOKYO (Thomson Financial)

Japanese Finance Minister Fukushiro Nukaga urged markets not to overreact as share prices across Asia fell sharply Friday on
worries about a US recession.
'At this stage, we shouldn't make a knee-jerk reaction,' Nukaga told reporters.
The benchmark Nikkei 225 Stock Average fell a steep 2.8 percent in morning trade, following a sharp drop on Wall Street overnight.
Dealers said remarks by Federal Reserve chairman Ben Bernanke fanned worries about the world's largest economy, which has been hit by the subprime mortgage
crisis.
However, 'there are various factors that move the markets,' Nukaga said.
'We need to look carefully at economic indicators and observe the effects of the US subprime mortgage issue and high crude oil prices,' Nukaga said.

Citygroup
Industry: Financial
Employees: 327,000 (09/30/2007)
Citigroup Inc. is a diversified global financial services holding company whose businesses provide a range of financial services to consumer and corporate customers.
The Company has more than 200 million customer accounts and does business in more than 100 countries. It was incorporated in 1988 under the laws of the State of
Delaware. The Company is a bank holding company within the meaning of the U.S. Bank Holding Company Act of 1956 registered with, and subject to examination
by, the Board of Governors of the Federal Reserve System. Some of the Company's subsidiaries are subject to supervision and examination by their respective
federal and state authorities. The Company is managed along the following segment and product lines: Global Consumer Group, Corporate Investment Banking,
Global Wealth Management, Alternative Investments and Corporate/Other. The Global Consumer Group consists of: U.S. cards, consumer lending, retail
distribution, consumer business; and international cards, consumer finance and retail banking. Corporate Investment Banking consists of capital markets and banking
and transaction services. Global Wealth Management consists of Smith Barney, private bank and Citigroup Investment Research. Alternative Investments consists of
private equity, hedge funds, real estate, structured products and managed funds. Corporate/Other consists of Treasury, operations and technology, corporate
expenses and discontinued operations. The following are the six regions in which Citigroup operates: United States; Mexico; Latin America; Eurupe, Middle East &
Africa; Japan; and Asia (excluding Japan). At December 31, 2006, the Company had approximately 144,000 full-time and 10,000 part-time employees in the United
States and approximately 183,000 full-time employees outside the United States.00000000000A Double Hit for the EconomyCitigroup's Loss, Lower Retail Sales Could Portend 'Feedback Loop'
Citigroup lost $9.83 billion in the final three months of the year, and retail sales fell in December. Together, the news shows how the slowing economy is punishing the
financial position of the world's biggest banks and ordinary American consumers.
The stock market fell sharply yesterday, with the Dow Jones industrial average losing 277 points, or 2.2 percent. Investors fear that a self-reinforcing pattern will set
in whereby the worsening condition of consumers will cause losses to financial institutions, making them less willing to lend money, making consumers that much less
able to spend.
"The feedback loop goes in both directions," said Jan Hatzius, chief economist for Goldman Sachs. "Weakness in the financial sector is partly a reflection of a slower
real economy, and the slower real economy is partly a result of weakness in the financial sector."
Citigroup's loss, the largest in the firm's nearly 200-year existence, was due to an $18.1 billion write-down of the value of mortgage loans Citi holds and a $4.1 billion
hit from higher-than-expected losses on consumer loans. Executives said in a conference call that the credit weakness was most evident in five states -- California,
Michigan, Florida, Arizona and Illinois -- that have been among the hardest hit by the housing slump and where loss rates on mortgages increased fourfold compared
with the rest of country.
Retail sales, meanwhile, fell 0.4 percent in December, the Census Bureau reported. There was a particularly steep drop in sales by retailers of building materials,
gasoline stations (because of lower fuel prices) and clothing stores, and sellers of books, music and sporting goods.
Part of the weak retail number was attributable to an early Thanksgiving, which pushed more holiday sales into November. Nonetheless, retail sales grew at the
slowest pace since 2002, and economists said American consumers were clearly pulling back.
"It was not a good month in December," said Brian Bethune, an economist with the consulting firm Global Insight. "We're certainly losing momentum there, and early
indications are that that continued in the first half of January."
The Citigroup results were the first in a round of major losses expected from some of the titans of U.S. finance. Most notably, Merrill Lynch will report what analysts
expect to be a multibillion-dollar loss tomorrow.
"I don't think the Street is convinced it's over yet," said Sal Morreale, a trader at Cantor Fitzgerald. "Retail sales were not good. You have delinquencies; you have
the subprime . . . add it all up and you've got real major problems."
Citigroup said it is taking aggressive action to gather more capital. It said it was raising $12.5 billion by selling stakes to big investors, including funds controlled by
cash-rich foreign governments. The Government of Singapore Investment Corp. will make a $6.88 billion investment. The Kuwait Investment Authority will invest $3
billion. The investments follow a $7.5 billion stake sold in November to the Abu Dhabi Investment Authority.
Citigroup also plans to raise $2 billion more through a public offering of preferred shares.
The bank reduced its dividend by 41 percent, a move that could free about $4 billion a year. It also said it would cut 4,200 jobs in addition to the 17,200 already
announced. Further reductions are expected.
While analysts welcomed the moves taken by the bank to improve its balance sheet, investors pummeled Citigroup shares, sending them down 7.3 percent.
"Citi's fourth-quarter results are unacceptable," said Vikram Pandit, recently named chief executive of the company, which is the largest U.S. bank by assets. "We
need to do better, and we will do better," he said in a conference call with investors and analysts.
Citigroup wasn't the only institution to raise more money yesterday. Merrill Lynch said it is getting a $6.6 billion investment from the Kuwait Investment Authority, the
Korean Investment Corp. and Mizuho Corporate Bank of Japan. Last month, Merrill said it would sell up to a $5 billion stake to Temasek Holdings, a government-
run fund in Singapore.
The moves to raise more capital are particularly important if financial institutions are to play their normal role of cushioning the blow to the economy amid a
slowdown. In a typical slowdown, banks stand ready to lend money to businesses and consumers, helping mitigate the damage. But in this financial crisis, banks are
finding themselves with a shortage of capital. That, economists worry, may make them exaggerate the downturn rather than cushion it.
Treasury Secretary Henry M. Paulson Jr. has praised banks for raising capital, even though they must do so on unfavorable terms, because it makes it more likely that
they will keep lending money through the slump.
"This has been a very difficult quarter, and there is no getting around that. . . . I am not going to make any promises," Pandit said in the conference call. "I am taking a
clear-eyed view of our company."
Also yesterday, the Labor Department reported that wholesale prices fell 0.1 percent in December, reflecting lower fuel prices. Excluding volatile food and energy,
prices paid by businesses rose 0.2 percent, which analysts said was not high enough to keep the Federal Reserve from lowering interest rates aggressively this month.
Bank of America said it would cut 12 percent of its corporate and investment banking staff, or 650 jobs, selling its equity prime brokerage business. That comes on
top of the 500 jobs cut from the corporate and investment bank last year.
And IndyMac Bancorp, the nation's second-largest independent lender, said it will lay off 2,400 people, or about 24 percent of its workforce, to cut costs.
Staff writer Howard Schneider contributed to this report. Tse reported from New York.

[January 16, 2008]
Asian Stock Markets Plunge
(AP Online Via Thomson Dialog NewsEdge) HONG KONG
Asian stock markets plunged Wednesday on growing speculation the U.S. economy _ a vital export market _ is sliding into a recession that could lead to a global slowdown.
Investors dumped stocks after an overnight sell-off in U.S. markets and on news that Citigroup Inc. had lost nearly $10 billion in the fourth quarter as it wrote down
bad mortgage assets. Weak U.S. retail sales figures also added to the gloom, sending the Dow Jones industrial average down 277 points, or 2.2 percent.
Click here to watch a video featuring Gartner vice president Michael Maoz sharing new insights on innovative technologies and processes shaping the future of
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"The moves on Wall Street signal fears that the U.S. is going into recession," said Rommel Macapagal, chairman of Westlink Global Equities in Manila, Philippines,
where the market sank 2.7 percent.
Such concerns are becoming widespread in Asia, he said. "We're all looking for new support levels."

In Hong Kong, the benchmark Hang Seng index was down 4 percent at 24,815.61 in afternoon trading, while Tokyo's Nikkei 225 index fell 3.35 percent to close at
13,504.51 points.
Markets in Australia, China, South Korea and New Zeland also fell sharply on worries about slower growth in the U.S. and around the world.
The United States economy, battered by problems in the housing and credit markets, is a major export market for Asian companies, and weaker demand from
American consumers will likely hurt profits at some of the region's companies. The U.S. Commerce Department said Tuesday that retail sales fell in December, and it
revised the November figure lower.
Investors saw more fallout from the subprime mortgage market when Citigroup said Tuesday it had written down $18.1 billion for bad mortgage assets.
"The fallout from the Citigroup result is significant, with many saying ... there is more bad news to come," said Trent Muller, an ABN Amro Morgan analyst in
Sydney, Australia. "We will see a bit of panic selling with a lot of investors taking cash off the table today."
There is also a growing fear that the Federal Reserve hasn't done enough to keep the U.S. economy going. The central bank has lowered its key interest rate by a full
percentage point to 4.25 percent since early August.
Now many investors and analysts believe the Fed will cut rates by a half-point at its Jan. 29-30 meeting.
"The risks of a recession in the United States appear to have increased," said David Cohen, director of Asian forecasting at Action Economics in Singapore. "It's still
clearly up in the air and that is reflected in the volatility that we see in the markets day-to-day. Every new headline can spook the market."
Japanese semiconductor stocks also fell after Intel Corp. shares plunged on concerns that the world's largest semiconductor maker is feeling the pinch of an ailing
U.S. economy.
A surge in the yen, which hurts Japan's vital exporters, also depressed Tokyo stocks. The U.S. dollar fell to 106.02 yen, the lowest level in 2 1/2 years.
"The Tokyo market is very sensitive to the strong yen," said Tsuyoshi Nomaguchi, an analyst at Daiwa Securities Co. in Tokyo.
In China, the benchmark Shanghai Composite Index fell 2.6 percent to 5,302.64 by midday. China shares, which are mostly isolated from world trends due to
regulatory controls, have gained about 1 percent since the beginning of the year, compared with losses in several other Asian markets.
But worries over the U.S. economic outlook and possible lending curbs by the central bank have hurt bank shares.
"The market is divided over the potential impact the U.S. subprime crisis may have on China's economy, and Hong Kong's weak performance gave some jittery
investors the final push to sell," said Essence Securities analyst Zhu Haibin.
___
Associated Press Writer Hrvoje Hranjski in Manila, and AP Business Writers Yuri Kageyama in Tokyo, Elaine Kurtenbach in Shanghai and Thomas Hogue in
Bangkok, Thailand, contributed to this report.

[January 16, 2008]
Asian markets plunge on worries that US is sliding into recession; Hang Seng down 4 percent
(Associated Press WorldStream Via Thomson Dialog NewsEdge) HONG KONG
Asian stock markets plunged Wednesday on growing speculation the U.S.
economy _ a vital export market _ is sliding into a recession that could lead to a global slowdown.
Investors dumped stocks after an overnight sell-off in U.S. markets and on news that Citigroup Inc. had lost nearly US$10 billion in the fourth quarter as it wrote
down bad mortgage assets. Weak U.S. retail sales figures also added to the gloom, sending the Dow Industrial average down 277 points, or 2.2 percent.
Click here to watch a video featuring Gartner vice president Michael Maoz sharing new insights on innovative technologies and processes shaping the future of
customer service. Click here to learn how Continental Dispatch Accelerates Customer Service with a Hosted Contact Center System. Click here to learn how to leverage greater long-term value from your CRM system. Click here to read how Oracle has dramatically improved pipeline management and, in turn, increased sales velocity.

"The moves on Wall Street signal fears that the U.S. is going into recession," said Rommel Macapagal, chairman of Westlink Global Equities in Manila, where the
market sank 2.7 percent.
Such concerns are becoming "widespread" in Asia, he said. "We're all looking for new support levels."

In Hong Kong, the benchmark Hang Seng index was down 4 percent at 24,815.61 in afternoon trading, while Tokyo's Nikkei 225 index fell 3.35 percent to close at
13,504.51 points.
Markets in Australia, China, South Korea and New Zeland also fell sharply on worries about slower growth in the U.S. and around the world.
The United States economy, battered by problems in the housing and credit markets, is a major export market for Asian companies, and weaker demand from
American consumers will likely hurt profits at some of the region's companies. The U.S. Commerce Department said Tuesday that retail sales fell in December and
revised the November figure lower.
Investors saw more fallout from the subprime mortgage market when Citigroup said Tuesday it had written down $18.1 billion for bad mortgage assets.
"The fallout from the Citigroup result is significant, with many saying ... there is more bad news to come," said Trent Muller, an ABN Amro Morgan analyst in
Sydney. "We will see a bit of panic selling with a lot of investors taking cash off the table today."
There is also a growing fear that the Federal Reserve hasn't done enough to keep the U.S. economy going. The central bank has lowered its key interest rate by a full
percentage point to 4.25 percent since early August.
Now many investors and analysts believe the Fed will cut rates by a half-point at its Jan. 29-30 meeting.
"The risks of a recession in the United States appear to have increased," said David Cohen, director of Asian forecasting at Action Economics in Singapore. "It's still
clearly up in the air and that is reflected in the volatility that we see in the markets day-to-day. Every new headline can spook the market."
Japanese semiconductor stocks also fell after Intel Corp. shares plunged overnight on concerns that the world's largest semiconductor maker is feeling the pinch of an
ailing U.S. economy.
A surge in the yen, which hurts Japan's vital exporters, also depressed Tokyo stocks. The U.S. dollar fell to 106.02 yen, it lowest in 2 1/2 years.
"The Tokyo market is very sensitive to the strong yen," said Tsuyoshi Nomaguchi, analyst at Daiwa Securities Co. in Tokyo.
In China, the benchmark Shanghai Composite Index fell 2.6 percent to 5,302.64 by midday. China shares, which are mostly isolated from world trends due to
regulatory controls, have gained about 1 percent since the beginning of the year, compared with losses in several other Asian markets.
But worries over the U.S. economic outlook and possible lending curbs by the central bank have hurt bank shares.
"The market is divided over the potential impact the U.S. subprime crisis may have on China's economy, and Hong Kong's weak performance gave some jittery
investors the final push to sell," says Essence Securities analyst Zhu Haibin.
____
Associated Press writers Hrvoje Hranjski in Manila, Yuri Kageyama in Tokyo, Elaine Kurtenbach in Shanghai and Thomas Hogue in Bangkok contributed to this
article.