Asian stocks fall on credit worries

HONG KONG (Reuters) - Oil and precious metals rose on supply concerns on Monday in thin holiday trade in Asia, while the few stock markets that were open, such as South Korea and Australia, unraveled on fear the credit crunch would spread further.

The price of wheat jumped to a fresh record high as investors piled into commodities they think will withstand a global economic slowdown.

Platinum hit another record high at $1,887 an ounce and sister metal palladium raced to a six month high after power shortages disrupted mining in major producer South Africa.

With Japan, China and Taiwan closed for national holidays, Seoul and Australia set the tone, with the Korea Composite Stock Price Index (.KS11) falling more than 3 percent by 0202

GMT.

"The KOSPI is actually doing better when compared to the other markets' losses during the holiday," said Kim Seong-joo, an analyst at Daewoo Securities. "The losses could have been steeper."

Indian shares seesawed in opening trade but managed to notch up a 0.4 percent gain.

The Dow Jones industrial average (.DJI) closed down 64.87 points, or 0.53 percent, at 12,182.13 on Friday, a fall of 4.4 percent over the week.

MSCI's measure of Asia Pacific stocks excluding Japan (.MIAPJ0000PUS) was down 1.4 percent by 0225 GMT.

"The slowing U.S. economy will hit emerging economies that rely heavily on exports and higher credit market risks also mean you should sell," Kim said.

AUSTRALIA DOWN

Australia's benchmark S&P/ASX 200 index (.AXJO) was also down by more than 2 percent by 0204 GMT, as investors sold banking stocks after the Reserve Bank of Australia raised inflation forecasts increasing chances of more interest rate increases.

Australia's central raised its inflation forecast to well above its comfort zone, underlining the risk of more interest rates increases.

"It certainly highlights the fact they're thinking seriously about going again in March," said Rory Robertson, interest rate strategist at Macquarie Bank. "Back to back hikes are unusual when rates are already at decade highs. But the RBA is more worried about inflation than it has been in a decade, and it seems determined to nip the problem in the bud."

National Australia Bank Ltd (NAB.AX), the nation's top lender by assets, lost 3.2 percent to A$32.36 and Commonwealth Bank of Australia Ltd (CBA.AX), the second-biggest lender, fell 3.4 percent to A$48.46.

PLATINUM HIGH

International investors are vigilant for further signs of a possible recession in the U.S. economy and a U.S. slowdown that could dent profits for Asia's exporters and weaken the dollar.

The dollar held steady after a weekend Group of Seven meeting acknowledged growing risks to the global economy and kept comments on currencies almost unchanged from the October statement.

The euro inched up against the dollar and the yen after European Central Bank President Jean-Claude Trichet warned the market not to bet on a cut in interest rates because of persistent inflation pressures in the euro zone.

"While there was no specific language change that could offer a major catalyst to FX markets, the overall tone from the G7 should continue to reinforce the cautious stance of investors," said currency analysts at Morgan Stanley in a research note.

Dollar-denominated commodities tend to make nominal price gains as the currency weakens but they have also risen on strong Asian demand and supply constraints.

Platinum hit another record high on Monday on the back of lingering supply concerns in South Africa, which produces four-fifths of the world's metal, while gold firmed near the record $936.50 an ounce it hit in early February.

Oil prices firmed in early Asian trade after soaring 4 percent on Friday, their biggest gain in nearly two months as production problems in the North Sea and Nigeria pushed aside fears that a U.S. recession would hurt fuel demand in the world's top consumer.

Venezuelan President Hugo Chavez on Sunday threatened to stop sending oil to the United States on Sunday after Exxon Mobil (XOM.N) froze $12 billion of Venezuela's overseas oil assets as it pushes for compensation for a nationalised oil project.

"If you freeze us, if you really manage to freeze us, if you damage us, then we will hurt you. Do you know how? We are not going to send oil to the United States, Mr. Bush, Mr. Danger," Chavez said on his weekly TV show.