Asia stocks plumb two-year low

By Kevin Plumberg

HONG KONG (Reuters) - Asian stocks fell to a two-year low on Wednesday, down 30 percent from a peak hit in November, as the past month's $30 drop in the price of oil has not been enough to shake a sense of fear about sharply slowing global growth.

World stock markets slid to the lowest since September 2006 on Tuesday, with investors increasingly sceptical about earnings expectations for 2009 given the mixed results so far in 2008 and the constant reminders about instability in the financial sector.

Crude crept up near $115 a barrel and gold prices edged higher, but the U.S. dollar continued to rise and extend the last two weeks of sharp gains. U.S. gasoline inventory data due later in the day is expected to show a fourth consecutive weekly loss.

"U.S. financial worries are responsible for about 80 percent of the market fall here today," said Masayoshi Okamoto, head of dealing at Jujiya Securities in Tokyo. "The rest is due to the eroding outlook for corporate earnings for the first half."

Japan's Nikkei share average fell 0.3 percent to a one-month low on apprehension about the earnings outlook after the Bank of Japan described the world's second-largest economy as "sluggish" -- a term it has not used since the Asian financial crisis a decade ago.

The MSCI pan-Asia equities index fell 0.5 percent to its lowest since July 2006, down 22 percent this year.

The MSCI all-countries world index on Tuesday tumbled to a 23-month low, down 18 percent year-to-date.

Hong Kong's Hang Seng index slipped 0.4 percent, after closing at a one-year low on Tuesday, with shares of HSBC the biggest drag.