ASIA-Shares seen weaker after Fed's warning spooks investors

WELLINGTON: Asian stocks are set for a weak start on Thursday after the Federal Reserve's warning that the United States faced a grim economic outlook spooked investors, driving Wall Street down more than 2 percent.

The Fed warned overnight there were "significant downside risks" to the economy which it moved to counter with an effort to lower long-term borrowing costs and bolster housing.

The U.S. central bank said it would launch a $400 billion program to weight its $2.85 trillion balance sheet more heavily toward long-term securities.

The warning drove down U.S. stocks more than 2 percent, while benchmark Treasury yields hit a more than 60-year low on the bond-buying announcement. The dollar rallied against the euro and the yen.

The Dow Jones industrial average dropped 2.49 percent. The Standard & Poor's lost 2.94 percent and the Nasdaq Composite Index fell 2.01 percent.

Asian stocks listed on Wall Street fell 2.9 percent while world stocks, as measured by the MSCI world equity index fell 2 percent.

Japanese markets, which ended 0.2 percent firmer in light trade on Wednesday, are seen weaker on Thursday. Nikkei futures in Chicago last traded down 1.2 percent to be 140 points below the last close in Osaka.

Australian stocks, which closed 0.8 percent higher on Wednesday, were heading for losses at the open on Thursday, as stock index futures fell 100 points to a 86.8-point discount to the last close of the underlying S&P/ASX 200 index. – Reuters