HONG KONG - ASIAN stocks were mixed on Friday after Japan slashed interest rates to almost zero as central banks around the world seek to pump cheap money into the markets to support a troubled global economy.

The Bank of Japan lowered its key rate from 0.3 per cent to 0.1 per cent after a near-unanimous vote by its policy board announced in the afternoon.

Pressure to cut Japan's main interest rate - known as the uncollateralised overnight call rate target - had intensified after the US Federal Reserve sliced it own benchmark rate to a range of zero to 0.25 per cent - the lowest level on record.

Analysts said the Fed's action left Japan, its exporters reeling and economy already in recession, with little choice but to follow suit.

Japan's central bank echoed that bearish view on Friday, citing the harsh impact of tumbling exports, weakening domestic demand and job losses.

'Under these circumstances economic conditions have been deteriorating and are likely to increase in severity for the immediate future,' the bank said in a statement.

An initial surge in Japanese stocks on the news soon petered out, and Tokyo's 225 stock average dropped 78.71 points, or 0.9 per cent, to 8,588.52. The dollar, higher in the morning, weakened against the yen after the bank's announcement.

'A strong yen continued to weigh down on the market, dragging down exporters,' said Yutaka Miura, a senior strategist at Shinko Securities in Tokyo.

Also following the Fed was the Philippine central bank, which cut its key interest rate by half a percentage point on Friday.

Recent moves by central bankers around the world to loosen monetary policy - aimed at reviving credit markets so companies spend again - would ultimately help equity prices, said David Cassidy, chief equities strategist at UBS in Sydney,'

'They're a necessary step on the road to recovery,' he said.

Hong Kong's Hang Seng Index was trading 1.9 per cent lower at 15,203.66 even as Beijing said on Friday it would help the territory keep its economy stable amid the global financial crisis.

Markets in mainland China, South Korea, Australia and Singapore traded higher but none posted gains of more than 1 per cent.

Energy shares saw heavy selling after oil continued its downward spiral overnight, with the January contract falling as low as US$35.98 - levels last seen in June 2004. Prices recovered some in Asian trade, with light, sweet crude for February delivery up 73 cents to US$42.40.

In the US on Thursday, markets lost ground amid more downbeat economic news and worries about the rating outlook of industrial powerhouse General Electric Co.

The Dow fell 219.35, or 2.5 per cent, to 8,604.99 and the Standard & Poor's 500 index fell 19.14, or 2.1 per cent, to 885.28. Futures suggested Wall Street would open lower on Friday with Dow futures down 49 points, or 0.6 percent, at 8,688 and S&P500 futures off 6.2 points, or 0.7 per cent, at 886.300.

In currencies, the dollar fell to 89.01 yen, down from 89.51. The euro traded at 1.4259.

KUALA LUMPUR
Malaysian shares closed 0.5 per cent lower on Friday in a bout of profit-taking ahead of the weekend, dealers said.

The Kuala Lumpur Composite Index lost 4.1 points to close at 876.40.

TOKYO
Tokyo share prices ended down 0.91 per cent on Friday on persistent economic worries, giving up brief gains made after the Bank of Japan cut interest rates.

Market players were worried after a fresh slump on Wall Street and a government projection that Japan's economy will not grow until at least 2010.

The Tokyo Stock Exchange's benchmark Nikkei index fell 78.71 points to finish at 8,588.52, giving up all the gains posted when the Bank of Japan announced its rate cut about an hour before the closing bell.

HONG KONG
Hong Kong share prices closed 2.4 per cent lower on Friday, as banking giant HSBC slid on worries about its need for capital and weak global credit markets, dealers said.

The benchmark Hang Seng Index closed down 370.30 points at 15,127.51.

Turnover was HK$57.38 billion (S$10.5 billion).

HSBC fell more than 5 per cent at one point as concerns about whether it will need to raise new capital hit investor confidence.

Airline Cathay Pacific jumped more than 6 per cent during the day on lower oil prices.

SHANGHAI
Chinese shares closed up 0.14 per cent on Friday as gains in airline companies following an aggressive cut in fuel prices offset losses in banks and property developers, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed up 2.77 points to 2,018.46 on turnover of 73.0 billion yuan (S$15.2 billion).

The Shanghai A-share index added 2.89 points, or 0.14 per cent, to 2,119.63 on turnover of 72.8 billion yuan, while the Shenzhen A-share index was up 5.93 points, or 0.91 per cent, at 655.28 on turnover of 37.2 billion yuan. -- AFP, AP, BERNAMA