Economic crisis rears its head

By Kevin Plumberg

HONG KONG (Reuters) - Asian stocks and emerging market currencies fell on Thursday, after dire U.S. private employment data and fears about corporate earnings cooled investor willingness to take risks for higher returns.

Major European stocks markets were expected to fall as much as 1.2 percent, according to financial bookmakers, following a 3 percent drop in U.S. stocks overnight.

The financial crisis of 2008 has snowballed into a global economic crisis in 2009, with consumer spending crippled, Asian exports collapsing and unemployment rising at an alarming rate.

"We saw a bit of hope earlier that the world may be in for a quick recovery, but the reality is there are still a fair bit of problems in markets," said Lucinda Chan, division director at Macquarie Equities in Australia.

Hopes that fiscal stimulus measures will support global growth, which fed the recent stock market rallies around the world, have been tempered by the cold, hard economic reality.

A report showed the U.S. private sector shed 693,000 jobs in December, increasing chances the U.S. payrolls report due on Friday will reflect greater job losses than the expected 500,000.

Stimulus aimed at infrastructure and interest rate cuts can take a long time to be fully felt, and company earnings are likely to deteriorate further in early 2009.

Japan's Nikkei share average fell 3.9 percent, after stringing together its longest winning streak since one that ended in April 2006.