HONG KONG (AFP) — Asian stocks were mainly lower Thursday on concerns over a US bailout for the finance sector, after President George W. Bush warned the US economy could slip into recession if the plan was rejected.
Bush, in a prime-time television address, warned "our entire economy is in danger" as he sought backing for a 700-billion-dollar Wall Street rescue package which is stuck in Congress.
In his 13-minute speech, he said that without quick action, the country could slip into a "long and painful recession".
In Tokyo, the Nikkei closed down 0.9 percent, Sydney ended 1.0 percent off and Singapore lost nearly one percent, while Taipei was more than one percent off.
The markets were taking their lead from Wall Street , which closed Wednesday 0.27 percent lower as traders focused for a second day on Congressional opposition to the emergency package.
However, Hong Kong was up 0.6 percent, led by Shanghai, which was 3.6 percent higher on news that the government planned to introduce new trading rules.
Bush told the nation: "Without immediate action by Congress, America could slip into a financial panic.
"Ultimately, our country could experience a long and painful recession."
He added that doing nothing could destroy banks, threaten retirement nest eggs, send house values plummeting, foreclosures skyrocketing, and lead to increased unemployment.
Bush also said a rare "spirit of cooperation" was needed in Washington in the face of the crisis. He invited presidential nominees John McCain and Barack Obama to the White House to meet top House and Senate leaders of both parties.
Investors, still edgy at the White House plan, moved into safer territory and bought oil stocks, sending crude prices higher, dealers said.
New York's main contract, light sweet crude for November delivery, rose 19 cents to 105.92 dollars a barrel, while Brent North Sea crude for November delivery was 16 cents higher at 102.61.
Congressional approval of the rescue plan would at least bring some calm to the market, said Tony Nunan, a Tokyo-based manager with Mitsubishi Corp's international petroleum business.
Traders in Japan were also reacting after the country posted its first trade deficit in seven months, the latest set of data showing the country is in danger of slipping into recession.
Japan logged a trade deficit of 324.0 billion yen (3.05 billion dollars) in August, compared with a year-earlier surplus of 743.65 billion yen, the finance ministry reported.
Excluding the month of January, when exports tend to be slow due to New Year holidays, the last time the trade balance fell into the red was 26 years ago.
The Bank of Japan also sought to keep liquidity in the market by pumping one trillion yen into it, the seventh straight business day it has resorted to an injection of cash.
However, Hong Kong rose as Shanghai rallied on hopes that regulators were to publish rules for margin trading -- a high-risk strategy where investors put up only a percentage of the cost of share buys -- from October 5.
The move would lead to better sales and revenue for securities firms, one analyst said.
Hong Kong's Bank of East Asia rallied as dealers took to assurances that it was in a stable condition following rumours that it was heavily exposed to assets linked to failed US investment bank Lehman Brothers and insurance giant AIG.
The bank rose more than three percent in early trade, despite depositors queueing outside branches for a second day as they feared for their savings. It had closed 6.9 percent down on Wednesday.
Global markets, reeling from months of uncertainty following the US subprime mortgage crisis, went into a tailspin last week after the collapse of Lehman and the government rescue of AIG.
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