Asian stocks hit despite Senate bailout approval

By Rafael Nam

HONG KONG (Reuters) - Asian stocks fell and investors sought the relative safety of government debt on Thursday after the U.S. Senate's approval of a massive bank bailout plan failed to dispel the deepening worries about the global economy.

Doubts about whether the U.S. House of Representatives will now approve the revised $700 billion (396 billion pound) rescue plan for the financial system also weighed, after their unexpected rejection of an initial package on Monday sent global markets reeling.

However, the dollar remained better bid against other major currencies given expectations the financial crisis is taking a toll on European financial firms, and more broadly on worldwide growth, which could lead to interest rate cuts elsewhere.

Shares were set also to open lower in Europe, where investors are bracing for comments on the financial crisis from the European Central Bank. The ECB meets later in the day amid expectations it will keep interest rates on hold at 4.25 percent.

"Even if the bill is passed, worries remain over the global economic outlook so financial markets are unlikely to stabilise," said Masamichi Adachi, a senior economist at JPMorgan Securities in Japan.

"It's a completely different world now. All the things U.S. authorities are doing now are simply aimed at preventing a global meltdown. They might trigger a short rally in markets but won't offer a fundamental solution," he said.

The MSCI index of Asia-Pacific stocks outside Japan fell 1.2 percent, while Tokyo's Nikkei average dropped 1.9 percent to end at its lowest close in three years.

Stocks in South Korea, Hong Kong, Singapore and Taiwan fell more than 1 percent each, while Australian shares fell 0.6 percent.