HONG KONG - ASIAN stocks slipped on Wednesday as investors grew more pessimistic about global growth prospects, knocking oil below US$140 (S$188.7) a barrel.

Companies across the region, such as Toyota Motor, the world's biggest car maker, and Huaneng Power International, China's top electricity provider, have been lowering their sales and earnings outlook in the face of slower demand and higher costs.

Federal Reserve Chairman Mr Ben Bernanke said that while the likelihood is high that the US economy would slow further, the outlook for inflation had also intensified, providing little comfort for investors and consumers struggling in stagflationary conditions.

'The macro economy is now facing the prospect of the triple shock of an extended credit crunch, high inflation and slowing growth; the very three objectives central bank policy is designed to overcome,' said Mr Sean Darby, chief Asia strategist for Nomura in Hong Kong.

Japan's Nikkei share average slipped 0.15 per cent, touching a 3-1/2-month low.

Toyota cut its global sales target for 2008 by 3.6 per cent, largely to reflect a sharp US slowdown, according to Japanese broadcaster NHK, dragging the company's shares down 1.3 per cent and representing the extent to which sluggish growth in the West has a domino effect on the rest of the world.

The MSCI pan-Asia equity index was down 0.7 per cent to its lowest in two years. The Asia Pacific ex-Japan index was largely unchanged on the day, though its year-to-date losses were 24 per cent.

The US dollar stabilised against the euro after hitting a record low overnight on instability in the US financial sector.

A sharp drop in oil prices and comments from Mr Bernanke supported the dollar.

'(Mr) Bernanke placed top priority in returning the US financial sector back to normal, which further pushed back rate hike expectations,' said Mr Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust Bank in Tokyo.

'But the dollar was not sold as much as otherwise possible thanks to the lower oil prices,' Mr Inoue said.

The euro was largely unchanged on the day at US$1.5912 after climbing to a high around Us$1.6040 The dollar recovered against the yen to trade at 104.83 yen up 0.2 per cent.

Crude was steady at US$138.64 a barrel after tumbling 4.4 per cent on Tuesday - its biggest daily loss since Jan 17, 1991, when the United States began bombing Iraq in the first Gulf war.

Japanese government bonds edged down with the benchmark 10-year yield rebounding from a three-month low as investors took a breather after a month-long rally, but lingering concern about the economy limited losses.

KUALA LUMPUR
The Kuala Lumpur Composite Index (KLCI) fell 1.57 points, or 0.14 per cent, to 1,126.03, at the opening.

HONG KONG
Hong Kong shares opened down 0.3 per cent on Wednesday, as investors remained nervous about the state of the US financial system, dealers said.

The Hang Seng Index opened 61.85 points lower at 21,112.92.

Dealers said the global outlook remained gloomy, because of worries over the credit system in the United States. The local market has fallen 4.6 per cent in the last two sessions.

'We think any rebound in the US market will be short-lived in the coming month and this surely will drag the stock investment sentiment over the global markets,' ICEA's Mr Ernie Hon said.

Hong Kong carrier Cathay Pacific defied the downward trend, rising 3.3 per cent in early trade on an easing in oil prices.

SHANGHAI
Chinese share prices were lower in Wednesday morning trading as property developers extended their losses on fears they will be pressured under a tight monetary policy environment, dealers said.

Banks also fell due to worries that the situation could cause cash-flow problems for property developers and lead to increased mortgage defaults by home buyers, saddling banks with bad loans, they said.

The benchmark Shanghai Composite Index, which covers A and B shares, fell 39.71 points, or 1.43 per cent, to 2,739.74 at 10.23am Singapore time.

The Shanghai A-share index was down 41.76 points, or 1.43 per cent, to 2,873.53, while the Shenzhen A-share index lost 18.16 points, or 2.05 per cent, to 866.15 points.

TOKYO
Japan's Nikkei share average fell 0.6 per cent on Wednesday, with bank shares extending the previous day's sharp losses amid deepening worries about the financial sector.

Toyota Motor slid on a report that the automaker would cut its global sales target for this year due to a slowdown in US sales.

A stronger yen added to exporters' woes, with video game maker Nintendo losing more than 4 per cent.

The benchmark Nikkei ended the morning down 73.39 points at 12,681.17. The broader Topix lost 0.9 per cent to 1,241.93.

SINGAPORE

Singapore stocks rose with the benchmark Straits Times Index (STI) up 9.45 points, or 0.33 per cent, to 2,840.20, at midday.

Some 513.1 million shares exchanged hands. Losers beat gainers 208 to 193. -- REUTERS, AFP, ST