Asian markets fall sharply on rejected U.S. auto turnaround (Reuters)  (30-03-2009)

HONG KONG (Reuters) - Asian shares slumped and were headed for their biggest daily fall in four weeks, while U.S. Treasuries gained after a U.S. task force rejected turnaround plans for automakers GM and Chrysler.

S&P stock futures dropped and European shares opened lower, with investors also spooked by news on Sunday that Spain would bail out regional savings bank Caja Castilla La Mancha, marking yet another official rescue of a firm hit by the global crisis.

The U.S. announcement by the White House autos panel marked a stunning reversal for GM and Chrysler and raises the prospect of bankruptcies that could further debilitate the already ailing U.S. economy.

News on the U.S. auto firms comes ahead of a busy week that will feature the G20 gathering in London, a policy meeting by the European Central Bank, and employment data in the United States.

Asian stocks went on to hit their 2009 low on March 4, before staging a spectacular recovery that as of last week had raised the Asia MSCI index outside Japan by 26 percent.

The U.S. autos task force on Monday determined that the turnaround plans submitted by General Motors Corp and Chrysler LLC could not ensure their viability.

The fate of GM has been of particular concern. The U.S. administration pledged only to fund operations at the biggest U.S. auto maker for the next 60 days, instead of granting GM's request for up to $30 billion in loans.

Rick Wagoner, GM's chief executive since 2000, also resigned under pressure from the U.S. task force.

Asian stock indices accelerated losses on the news. Shares in South Korea, Hong Kong, Taiwan, Singapore, and India were down more than 4 percent.

Source: Reuters