Fresh gloom engulfs Asian markets

Agence France-Presse

GM warned it could be broken up after its auditors voiced "substantial doubt" about the struggling automaker's ability to stay afloat.

Investors were also bracing for a key U.S. labor market report that was expected to show further massive job losses in the United States as the world's largest economy sinks deeper into recession.

There was disappointment that Chinese Premier Wen Jiabao did not announce any fresh stimulus measures in his annual "state of the nation" address on Thursday.

But a top planner said Beijing could still boost its 4 trillion yuan ($585 billion) spending package if it proves inadequate in boosting growth during the global financial crisis.

"The decision will be based on the development of the situation," Zhang Ping, head of the National Development Reform Commission, said on the sidelines of a parliamentary session. Asian markets limped to the end of another tough week. Tokyo dropped 3.50 percent to a four-month low, while Seoul lost 0.3 percent and Sydney shed 1.4 percent.

Investors took their cue from Wall Street where the Dow Jones Industrial Average sank 4.09 percent Thursday to end at its lowest level since April 1997. Citigroup's share price dropped below $1 for the first time. The market was hit by a wave of negative news, including the stark warning from GM that it could go bust.

"The market had also hoped to hear news from China on new stimulus measures," said Kazuhiro Takahashi at Daiwa Securities SMBC. "But nothing clear came out."

General Electric, a massive conglomerate hit by an unprecedented meltdown in shares linked to fears about its finance arm, sought to reassure investors it would weather the crisis. GE's chief financial officer Keith Sherin said the company "is safe and secure in this environment" and sees no need for additional capital.

Investors were braced for a dismal U.S. jobs report later in the day. Analysts estimate the world's largest economy shed about 650,000 jobs in February, even worse than January's 598,000, which was the most since 1974. The unemployment rate was forecast to jump to 7.9 percent, from 7.6 percent the previous month, which was the highest level since 1992.

"The current recession, which initially affected the housing and financial sectors, has now disappointingly spread across a broad swath of the economy," Mike Fitzpatrick at MF Global said.