By Kevin Plumberg

HONG KONG, Nov 18 (Reuters) - Asian stocks fell on Tuesday after Citigroup cut 52,000 jobs in a dramatic move to save itself and downbeat policymaker comments reflected worsening economic conditions that will unlikely improve until well into 2009.
Despite relatively stable conditions in short-term credit markets, banks were struggling to contain climbing losses on bad loans, with Citi, the second-largest U.S. bank, reducing 15 percent of its workforce and HSBC laying off an additional 500 staff in Asia after announcing 1,100 job cuts in September.
"Investors find it hard to invest in the financial sector unless signs emerge that the global economy has started to improve," said Kazuhiro Takahashi, general manager of the equity marketing department at Daiwa Securities SMBC in Tokyo.
Rising unemployment is a painful reminder of how the brutal trend of slashing away risk in investor and institutional portfolios, which has been a key factor in erasing about $7 trillion from global equity market cap so far this year, has far-reaching consequences beyond just financial markets.
Meanwhile, the South Korean won was on track for a sixth straight day of losses against the U.S. dollar, which held broadly firm as investors continued to seek safety in the world's foremost reserve currency.

Asia-Pacific stocks outside of Japan fell 1.85 percent, bringing year-to-date losses to around 58 percent, according to an MSCI index. Asia's losses have outpaced the all-country world index, which is down 47.5 percent in 2008.
Japan's Nikkei share average was down 1 percent, led by Softbank Corp, the country's third-biggest mobile phone operator.

Shares of Mitsubishi UFJ Financial Group (MUFG), Japan's largest bank, were down 2.7 precent after Citigroup's massive layoffs reignited fears about the financial industry's stability.
Hong Kong's Hang Seng index dropped 1.9 percent, with Hong Kong Exchanges & Clearing stock the biggest percentage decliner for a second day, off 5.5 percent.
Falling 2009 economic growth expectations have been feeding through to financial and commodity markets, as investors price in much slower demand next year. Indeed, Japan's Economics Minister Kaoru Yosano said it was hard to expect the world's No. 2 economy to log positive growth in the next fiscal year starting in April.
However, some large investors have cautiously begun to look for value amid the wreckage. Bob Doll, global chief investment officer of equities at BlackRock Inc, noted the dividend yield on the U.S. S&P 500 index last week was higher than the yield on the 10-year U.S. Treasury note -- the first time that has happened in nearly 50 years.

"To us, this suggests that valuation levels are helping to create a floor for equity prices," he said in a note.
Also, John Paulson, a hedge fund manager who gained a superstar reputation after early on betting big against the U.S. housing market, told the Financial Times he has started to buy securities backed by residential mortgages.
Despite the very selective buying in some markets, most investors were still locked into recession trades, one of which has been to buy yen.
The yen remained underpinned by risk aversion on Tuesday as Tokyo shares slipped following a fall in U.S. stocks on deepening concerns about a global recession.
The U.S. dollar was little changed at 96.46 yen, while the euro slipped 0.1 percent to 121.90 yen. The euro eased 0.1 percent to $1.2642.
The Korean won was quoted at 1,414.9/6.1 per U.S. dollar, down from Monday's domestic close of 1,409.0.
The South Korean currency has lost more than a third of its value against the dollar this year on expectations global economic turmoil would worsen the country's international balance of payments and economic growth.
Two-year Japanese government bond yields hit an eight-month low on Tuesday following a dip in JGB repo rates this week and on market expectations for the Bank of Japan to keep interest rates low in coming months.
Two-year JGB yields dipped 0.5 basis point to 0.515 percent , the lowest since March.
The BOJ is seen likely to keep interest rates steady at 0.3 percent at a two-day policy meeting ending on Friday, but analysts say speculation of a possible rate cut in coming months may grow if economic conditions deteriorate further.
U.S. crude for December delivery was up 11 cents at $55.06 a barrel, after settling down $2.09 at $54.95 on Monday, the lowest settlement since late January 2007 as worries about the economic outlook in the United States and Japan stoked concerns about global fuel demand.

(Additional reporting by Rika Otsuka in TOKYO; Editing by Jan Dahinten) Keywords: MARKETS GLOBAL (Reuters Messaging:kevin.plumberg.reuters.com@reuters.net Email: kevin.plumberg@thomsonreuters.com; +852 2843-6370)

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