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TOKYO - Asian stocks slumped Monday, as a global market rally fizzled out ahead of several key events that are set to test investor confidence in the ailing US economy, dealers said.
They said major markets in the region fell on Monday as investors took their cue from Wall Street where shares lost ground Friday, snapping a strong two-day rally.
Sentiment remained fragile in the wake of last week's rollercoaster ride that saw global shares slump on fears of a US recession before rebounding sharply following a hefty US interest rate cut and an economic stimulus plan.
Chinese share prices ended Monday trading 7.19 percent down as concerns ranging from the ailing US economy to severe winter weather spooked investors.
Singapore stocks fell 142.53 points to 3,016.95 at the start of the afternoon session, after slumping 3.5 percent in the morning.
Tokyo closed down almost 4.0 percent, ending a three-day rebound. Taiwan share prices ended Monday trading down 3.28 percent while South Korean stocks closed down 3.85 percent.
Hong Kong shed 4.7 percent by lunch break, while Indian stocks fell 4.58 percent in morning trade.
"The market is fluctuating wildly," said Francis Lun, general manager at Fulbright Securities in Hong Kong. "Investors don't have the appetite to buy stocks now."
After last week's emergency US interest rate cut, many investors are hoping that the Federal Reserve will deliver another dose of monetary medicine at the end of a two-day meeting on Wednesday.
The fear is that stocks could resume their decline if the Fed fails to deliver the quarter-point reduction many traders are betting on.
Market views are also mixed about whether the central bank's efforts will be enough to prevent the US economy from slipping into recession.
"If the Fed makes another rate cut, the market will likely take the decision positively," said Mizuho Research Institute senior analyst Koji Takeuchi.
"But the market may turn cautious, as there are expectations that the forthcoming data may revive concerns about the US economy," said Takeuchi.
US President George W. Bush meanwhile is scheduled to deliver his annual State of the Union address later Monday, while key US jobs data due Friday will be keenly awaited for fresh clues on the health of the world's largest economy.
"Many investors are taking a wait-and-see attitude ahead of a series of events this week," said Won Jong-Hyuck, an analyst at SK Securities.
"All eyes will be on whether the upcoming US job market data will meet the consensus or not, given that the December data were a key culprit in the heightened volatility in global financial markets."
In New York, the blue-chip Dow Jones Industrial Average slipped 1.38 percent Friday to close at 12,207.17, capping a tumultuous week. - CNA/ir
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