SINGAPORE, Nov 20 (Reuters) - Asian stock markets hit two-month lows on Tuesday as investors dumped bank shares amid escalating worries about credit losses, with the drop in risk appetite boosting the yen and Japanese government bonds.

Commodities were also caught up in the downdraft, with oil falling towards $94 a barrel, gold at a four-week low and industrial metals slumping on fears that demand would be knocked by slower economic growth.

Financial stocks were pummelled after Goldman Sachs downgraded Citigroup to sell from neutral, saying the largest U.S. bank may have to write off $15 billion over the next two quarters as mortgage losses dent earnings.

"The concern is that if there are unknown losses still to be recorded, the risk aversion that has been present in markets will remain," said Tony Brennan, equity strategist at Deutsche Bank.

At 0437 GMT, Tokyo's Nikkei average was down 0.6 percent after earlier touching a 16-month low, while MSCI's measure of other Asia Pacific stocks was 2.4 weaker, after hitting its lowest since Sept. 24.

The MSCI index for Asia Pacific stocks excluding Japan has fallen 12 percent from a Nov. 1 peak, but is still up about 30 percent this year.

"It's a Black November," said Masayoshi Okamoto, head of dealing at Japan's Jujiya Securities.

South Korea's benchmark KOSPI slid 2.3 percent and Australia's S&P/ASX 200 lost 1.6 percent.

Safe-haven government bonds tend to perform well in this environment as investors seek cover in sovereign debt, pushing yields sharply lower.

Japan's 10-year bond yield fell 1 basis point to 1.45 percent, after hitting a 22-month low of 1.435 percent.

High-yielding Asian debt moved sharply in the opposite direction, with the iTRAXX Asia ex-Japan high-yield index up 5 percent. The index, a leading measure of risk aversion in Asia, has risen nearly 40 percent since the start of the month.

FINANCIALS HIT AGAIN
Investors sold bank stocks across the region, with National Australia Bank off 1.9 percent and Japan's Mitsubishi UFJ losing 1.4 percent. MSCI's index of regional financial stocks shed 1.9 percent.

South Korea's Kookmin Bank extended losses to 4.4 percent after the country's regulator upped the provisions that banks must make against normal corporate loans.

Copper and zinc futures on the Shanghai Futures Exchange were both down by their daily limits while aluminium also fell sharply, continuing losses seen in London on Monday.

"Absolutely brutal" was how Investec described trading on the London Metal Exchange, adding: "The whole base metals complex received a thorough hammering as sustained selling dominated proceedings."

Mining giant BHP Billiton fell 3 percent and Korea Zinc slid 6.3 percent.

A stronger yen weighed on some Japanese exporters as investors fret that the firmer currency will trim profits.

Honda Motor lost 2.1 percent and Toyota Motor fell around 1 percent.

The dollar bought 109.96 steady after falling 1 percent in late New York trade.

Investors tend to sell the lower-yielding yen to fund purchases of riskier and better-yielding assets, but reverse those trades in times of risk aversion.

The dollar was steady against the euro at $1.4665.