HONG KONG: Asian stocks dipped on Monday on worries about the fate of U.S. automakers and banks, while the dollar retreated as market players booked profits on the currency's rise to a three-year peak last week.
Markets sent mixed signals at the start of the week, with the safe-haven dollar and government bonds losing ground even as financial shares dragged down most stock indexes. Oil prices jumped for a second day on hopes for more supply cuts by the Organization of the Petroleum Exporting Countries.
The broad Topix in Japan slid to a 25-year intraday low as the country's shares remain the worst hit among Asian markets, while the Shanghai composite index surrendered some of this year's solid gains that came on back of hopes for an economic recovery.
Asian stock markets have held up better than others in the United States and Europe on expectations that households and governments in the region have more room to keep spending because they are less indebted.
But analysts said Asia's dependency on exports meant that regional equities were likely to play catch up with the tumble elsewhere.
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Figures on Monday showed Japan suffered its biggest current account deficit on record in January because of plunging shipments abroad.
"We don't believe Asia can outperform the G-3 this year," said Clive McDonnell, Asia strategist at BNP Paribas in Hong Kong, referring to the Group of 3, or Japan, the United States and the euro zone economies. "In the past few weeks, Asia has rolled over quite clearly."
The MSCI index of Asia-Pacific stocks outside Japan dipped 0.5 percent following a slight rise in the U.S. S&P 500 on Friday after data showed U.S. unemployment surging to a 25-year high in February.
Stocks slumped globally last week on renewed concerns about the impact of the crisis in the United States as the government stepped in with another lifeline for the insurer American International Group and General Motors' auditors raised doubts about the ability of the company to survive outside of bankruptcy.
Regional currencies were mixed on Monday, with the South Korean won slipping back toward an 11-year low even as the Philippine peso edged up.
Foreign investors have been persistent sellers of Asian stocks, one of the factors knocking regional currencies lower.
The fund tracker EPFR Global said that Asia excluding Japan equity funds saw the biggest outflows among emerging market regions in the week ending last Wednesday, seeing $1.09 billion yanked out, the most in 20 weeks.
Overall, $10.4 billion was pulled out of global stock funds followed by EPFR Global.
"Until equities stabilize globally, it is hard to see an end to portfolio outflows from Asia," said Société Générale's foreign exchange sales desk in a note to clients.
The dollar backed down from a three-year peak reached mainly on the back of safe-haven buying and as U.S. investors have kept selling their holdings of foreign assets to repatriate funds.
The dollar index, a gauge of its performance against six major currencies, dipped 0.2 percent to 88.369 after climbing as high as 89.624 last week.
The U.S. currency also took a hit after the index fell just short of the 90 line, which coincides with a 38.2 percent Fibonacci retracement of its long slide between 2001 and 2008 that serves as a major point of chart resistance.
The euro gained 0.2 percent to $1.2681, while the dollar was little changed at ¥98.30.
Oil prices jumped 93 cents to $46.45 a barrel, gaining nearly 7 percent in the past two trading sessions on expectations OPEC will cut supplies further. But gold dipped $3.50 an ounce to $936.10.
In government bonds, the benchmark 10-year Japanese yield was unchanged at 1.290 percent.
U.S. Treasuries posted slight gains. The 10-year note rose 3/32 in price to yield 2.864 percent, down about a basis point from late New York trade on Friday.
