A slump in Chinese exports and imports deepened sharply in January, underlining the damage caused by the global crisis, while efforts by the United States for solutions were met with growing scepticism from markets.
Further evidence of the banking fallout came from Switzerland's Credit Suisse, which posted a record financial loss for 2008.
US President Barack Obama's revamp of the bank rescue plan is part of his administration's blueprint to reinvigorate the world's largest economy after the financial crisis battered asset prices, dried up lending and wiped out millions of jobs.
The US crisis has reverberated around the world, pushing many leading economies into recession, raising protectionism fears and sparking waves of similar multi-billion dollar stimulus packages meant to reinvigorate sagging economies.
But doubts remain about Obama's revamped plan, which could reach $2 trillion and was developed as lawmakers consider economic stimulus plans of more than $800 billion.
The bank plan was met with sceptical market reaction, mainly because of the lack of specifics, when it was announced yesterday. That sceptic note spread to Asian markets today.
The US dollar and the yen both held on to big gains as risk aversion returned to markets after US Treasury Secretary Timothy Geithner's much-anticipated bailout package.
Asian stocks fell, led by financials. The MSCI index of Asia-Pacific stocks outside Japan dropped 1.9 per cent. South Korea's KOSPI was down 0.7 per cent.
Japan markets were shut to market a public holiday.
“The economic shock is so strong that policy reactions can only buffer its impact,” said Sebastien Barbe, a currency strategist with Calyon in Hong Kong.
China, like many Asian economies, is reeling from a slump in trade caused by the financial crisis, which has pushed major demand centres such as the United States, Europe and Japan into recession.
January trade data showed exports fell 17.5 per cent from a year earlier, a sharp acceleration from a 2.8 per cent dip in December.
Imports plummeted 43.1, twice as much as December, although the Chinese New Year holiday which fell in January meant there were fewer working days, making it hard to judge the severity of the underlying deterioration in trade.
But the declines were sharper than expected and mirrored big falls elsewhere in Asia, suggesting to several analysts that the world's third-biggest economy has yet to hit bottom - despite some grass shoots of recovery seen in rising metals prices.
“We will not see good export and import figures in the first and second quarters due to the slowing global economy,” Zhang Shiyuan, an analyst with Southwest Securities in Beijing, said.
Reuters