ASIA-Shares face another day of turmoil

WELLINGTON: Asian stocks are likely to see another day of wild trade on Tuesday, as fears the world could tip back into recession after the U.S. ratings downgrade saw investors flee equity markets in Europe and the United States.

The main Wall Street indices fell as much as 6.9 percent, the worst session in nearly three years, as panic selling gripped the market.

The CBOE Volatility Index jumped 50 percent to 48, reflecting the view of some market participants that the U.S. government was unable to control its growing debt problem in the wake of the decision by Standard & Poor's to cut the U.S. credit rating by one notch.

On Monday, President Barack Obama blamed the downgrade on political gridlock in Washington and said he would offer some recommendations on how to reduce federal deficits.

Banks were among the big losers, with Bank of America Corp down 20.3 percent to $6.51.

Asian stocks listed on Wall Street fell 6.6 percent while world stocks, as measured by the MSCI world equity index, were 5.1 percent lower.

British shares fell 3.4 percent to a 13-month low while European shares slid 4 percent to their lowest close in more than two years.

The winners in the rout were safe havens such as government bonds and gold , which rose to a record high above $1,700 an ounce, with the safe-haven currencies such as the Swiss franc and the yen also rising.

Japanese markets are set to back up Monday's fall with another sharp slide, with Nikkei futures traded in Chicago 375 points below the last closing level in Osaka.

Australian stocks are also eyeing a poor open, with share price index futures down 153 points to 3,800, a 186.1 point discount to the close of the underlying S&P/ASX 200 index. – Reuters