Asia stocks slip on economy fears

Asian stocks mostly fell Tuesday, extending recent losses amid fears about the global economy, but well off the troughs seen earlier as dealers looked to a key meeting of the US Fed later in the day. Gold soared to record levels and crude prices fell as Asian stocks plunged in the morning, despite G7 and G20 pledges to bolster the global economy and European Central Bank action on eurozone debt.However, hopes the US central bank could outline plans for a new stimulus package later Tuesday provided support to investors who had gone into selling mode after the US debt downgrade by Standard & Poor\'s last week. Tokyo ended 1.68 percent, or 153.08 points, lower at 8,944.48 -- after tumbling 4.40 percent at one point -- while Hong Kong swung wildly and closed down 5.66 percent, losing 1,159.87 points to 19,330.70.Seoul closed 3.63 percent, or 68.10 percent lower at 1,801.35 -- staging a huge rebound after falling about 9.9 percent in the morning. Taipei fell 0.79 percent, or 59.68 points, to 7,493.12, having earlier shed five percent. However, Sydney staged a massive turnaround after slumping five percent in morning trade. The market closed 1.22 percent, or 4.87 points, up at 4,034.8. And Shanghai bounced back to close flat after data showed inflation had edged up slightly. The Shanghai Composite Index edged down 0.75 points to 2,526.07. \"There seems to be some optimism coming through markets that Ben Bernanke might outline plans for a QE3 package this evening,\" said IG Markets analyst Ben Potter. \"Even if he does mention this, there will be a lot of speculation as to whether or not it will actually make much difference given the wildly divergent views as to the effectiveness of the previous packages.\"Fear continued to dominate after the historic downgrade of the United States by Standard & Poor\'s on Friday and a warning from the head of the European Commission Thursday that the debt crisis in the eurozone had likely spilt over into other economies. \"S&P\'s downgrade of the US credit rating is yet another demand from Wall Street for QE3 (quantitative easing), which their own private bank, the Federal Reserve, will no doubt deliver shortly,\" said a fund manager at Grand Private Equities Wesley Legrand. Shanghai reversed its losses after China announced inflation had hit 6.5 percent in July, a more than three-year high, amid hopes that the price rises had levelled out and the government would ease up on its rate hikes. Asian stocks slumped on opening after Wall Street suffered its steepest one-day drop since late 2008 on Monday, with the Dow Jones Industrial Average falling 5.55 percent, the broader S&P 500 down 6.7 percent and the tech-heavy Nasdaq diving 6.9 percent. Gold, viewed as a safe haven in financial turmoil, ended at $1,753.00-$1,754.00 an ounce in Hong Kong after hitting a record high $1,772.09 earlier in the day.The greenback dropped to 77.25 yen in Tokyo afternoon trade from 77.68 yen in New York late Monday. The euro climbed to $1.4243 from $1.4179, but fell to 110.10 yen from 110.23 yen.The debt fears also weighed on the Australian dollar, which briefly fell below parity with the greenback for the first time since the Japanese earthquake in March. In afternoon trade the \"Aussie\" was at 99.42 US cents, down from 103.55 cents on Monday but it later returned to 102.14.On oil markets New York crude sank below $80 in Asian trade and its Brent counterpart briefly dropped under $100.New York\'s main contract, West Texas Intermediate (WTI) light sweet crude for delivery in September shed $2.35, or 2.89 percent, to $78.96 per barrel at 0600 GMT, a level it has not seen since September 30, 2010.WTI prices had plunged $5.60, or 6.89 percent, to a low of $75.71 in intra-day trade before clawing back some ground.Brent North Sea crude for September delivery slipped $1.82, or 1.75 percent, to $101.92. It had earlier sunk below $100, a level it had not breached since February 8.