U.S. economy fears plague stocks but buoy bonds

By Tom Miles

HONG KONG (Reuters) - Asian investors balked at ugly U.S. economic data and a grim outlook for Japanese banks, causing stocks to sag and safe-haven bonds to perk up on Friday, while oil fell further after its biggest monthly drop since 2004.

A surprise jump in U.S. weekly jobless claims, weaker than expected second-quarter gross domestic product numbers and a shock revision of data that showed the U.S. economy shrank in the final quarter of 2007 undermined the dollar, oil prices and hopes for a speedy recovery.

The triple whammy of sour data, plus a quarterly earnings result from Exxon Mobil (XOM.N) that fell short of expectations, drove the Dow Jones industrial average .DJI down 1.8 percent on Thursday.

Asian shares followed suit on Friday, with Tokyo's stock market troubled by the performance of Japanese banks after sharp declines in first-quarter profitability at Mizuho Financial Group (8411.T) and Sumitomo Mitsui Financial Group (8316.T).

"While everyone has been worried about the subprime, it has become clear that the problem for Japanese banks is not the subprime, but everything else," said Nana Otsuki, banking analyst at UBS Securities in Tokyo, after the banks reported on Thursday.

Tumbling profits also hit electronics makers NEC (6701.T) and TDK (6762.T), contributing to a 2.2 percent drop in the Nikkei index .N225 by 3:30 a.m. British time.

Investors were also cautious ahead of a U.S. July employment report later on Friday.

"Investors are reluctant to buy shares ahead of U.S. economic events," said Mitsuo Shimizu, deputy general manager of equity department at Cosmo Securities.