HONG KONG - ASIAN stocks stumbled on Wednesday after downbeat data about the US economy showed the recession there was deepening.

Japan's Nikkei 225 stock average dropped 234.83 points, or 2.7 per cent, to 8,488.95, after being closed on Tuesday for a holiday.

Shares in Toyota Motor Corp tumbled 4 per cent in their first trading day since Monday, when the world's largest automaker said it expected to post its first operating loss in almost 70 years.

Automakers across the region were hit with heavy selling as well.

Hong Kong's Hang Seng Index dropped 0.6 per cent to 14,142.12, while South Korea's Kospi lost 2.3 per cent to 1,117.69.

'The end-of-the-year-bear-market-feel-good rally is ending sooner than many expected,' said Mr Kirby Daley, senior strategist at Newedge Group in Hong Kong.

'Investors are being hit in the face with the reality of just how bad the US economy is and they're seeing firsthand the effects this is having on the consumer and, as a result, companies like Toyota and US retailers.'

Elsewhere, benchmarks in Taiwan and Singapore fell, while key indices in Australia and Singapore gained.

Many investors found little reason to buy after reports released overnight in the US showed no signs of a turnaround in the world's largest economy, already in recession.

The government said third-quarter gross domestic product fell at an annual rate of 0.5 per cent.

The hard-hit housing sector also continued to deteriorate. New home sales weakened last month to the slowest pace in nearly 18 years, and prices of new homes dropped by the biggest amount in eight months.

The sobering news sent Wall Street lower, with the Dow Jones industrial average shedding 100.28 points, or 1.18 per cent, to 8,419.49. The Standard & Poor's 500 index fell 8.47 points, or 0.97 per cent, to 863.16.

Wall Street futures pointed to a flat opening on Wednesday, when US markets will close early for the Christmas holiday.

Oil prices were steady, up 8 cents at $39.07 a barrel in Asian trade on the New York Mercantile Exchange. The February contract fell 93 cents to settle at $38.98.

In currencies, the dollar sank to 90.39 yen, down from 90.85 yen.

The euro traded higher at $1.3966 from $1.3932.

Many markets across Asia will be closed on Thursday for Christmas, including Hong Kong, Singapore and Australia. Japan's stock market, however, will be open.

TOKYO
Japanese share prices closed down 2.37 per cent on Wednesday on persistent worries about the auto sector after Toyota slashed forecasts and US carmakers' shares skidded on Wall Street.

The Tokyo Stock Exchange's benchmark Nikkei index ended down 206.68 points at 8,517.10.

The Topix index of all the Tokyo Stock Exchange First Section issues fell 21.73 points or 2.56 per cent to 826.99.

KUALA LUMPUR
Malaysian shares closed 0.2 per cent lower Wednesday amid weak market sentiment as many investors were away for the Christmas break, dealers said.

The Kuala Lumpur Composite Index lost 1.54 points to close at 869.62.

SHANGHAI
Chinese shares closed down 1.76 per cent on Wednesday amid worries over deteriorating corporate earnings after a major oil refiner posted a profit warning for the fourth quarter, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed down 33.43 points at 1,863.80 on turnover of 48.3 billion yuan.

HONG KONG
Hong Kong share prices closed 0.3 per cent lower in a shortened session on Wednesday, limiting early losses as property developers recovered from recent falls, dealers said.

The benchmark Hang Seng Index closed down 36.65 points at 14,184.14.

Turnover was light at HK$18.34 billion (S$3.4 billion).

Bank HSBC and China Mobile also improved on recent showings, dealers said.

The market will be closed until Monday due to public holidays. -- AFP, BERNAMA, AP