BANGKOK (AP) — Asian stocks floundered Tuesday as investors digested a credit downgrade slapped on Italy and awaited the outcome of a two-day Federal Reserve meeting that many hope will announce measures to boost U.S. growth. Oil prices hovered below $86 a barrel while the dollar strengthened against the euro but slipped against the yen. Japan's Nikkei 225 index fell 1.4 percent to 8,739.74 as export shares sagged amid a persistently strong yen that weighs on company profits. Australia's S&P/ASX 200 dropped 1 percent to 4,042.90. Benchmarks in Taiwan, Indonesia and the Philippines also fell. But Hong Kong's Hang Seng rose 0.1 percent to 18,938.48 and South Korea's Kospi was 0.1 percent higher at 1,823.63. Indexes in mainland China, India, Singapore and Thailand also gained. Investors are reluctant to engage in big moves as talks dragged on between international lending officials and Greece, which is teetering on the brink of bankruptcy. "Today you don't have the panic selling you had yesterday, but still there is no buying. So we are in for a long bear market. I don't think the market is ready to rebound yet," said Francis Lun, managing director of Lyncean Holdings Ltd. in Hong Kong. Meanwhile, Standard & Poor's downgrade of Italy's credit rating Monday added to "the pain and fear across eurozone markets," Credit Agricole CIB said in a research note. Italy's rating was cut by one notch due to weakening economic growth prospects and higher-than-expected levels of government debt, S&P said. "Risk aversion remains highly elevated, with little prospect of a drop any time soon as Italy's downgrade adds to Europe's woes," Credit Agricole said. In Tokyo trade, Honda Motor Corp. dropped 2.3 percent and electronics giant Sony Corp. fell 4.2 percent. Fujitsu Ltd., which provides technology services for mobile devices and servers, tumbled 4.2 percent. Japanese Finance Minister Jun Azumi told reporters Tuesday that the recent sharp rise of the yen has slowed the pace of the country's economic recovery from the March earthquake and tsunami. Tokyo has not ruled out intervening in the currency market to stem the yen's rise against the U.S. dollar and other major currencies. Investors are looking to the U.S. Federal Reserve in search of positive news. Many economists expect the Fed, which starts a two-day policy meeting later Tuesday, to announce something to jolt the sputtering U.S. economy. Last month, the Fed took the step of endorsing a plan to keep short-term interest rates near zero through mid-2013. Some economists expect the Fed to eventually try for the third time to stimulate growth through a program to buy Treasurys to lower long-term interest rates. That's a step known as "quantitative easing." But hopes of Fed action did not mollify intensifying worries over Greece. Investors fear the nearly bankrupt country won't be able to convince lenders that it can pay its debts — and that it won't get the money it needs to avoid a default. The Dow Jones industrial average closed down 0.9 percent at 11,401.01 on Monday. The drop ended five days of gains for stocks and marked the return of the back-and-forth trading that has accompanied the uncertainty about Europe's debt crisis. The Nasdaq composite fell 0.4 percent to 2,612.83. The Standard & Poor's 500 index fell 1 percent to 1,204.09. Benchmark oil for October delivery was down 3 cents at $85.67 in electronic trading on the New York Mercantile Exchange. Crude dropped $2.26 to settle at $85.70 on Monday. In London, Brent crude for November delivery was up 18 cents at $109.32 on the ICE Futures exchange. In currencies, the dollar rose slightly to 76.53 yen from 76.50 yen in late trading Monday in New York. The euro fell to $1.3616 from $1.3671. ___ AP Television News producer Annie Ho contributed from Hong Kong. Copyright 2011 The Associated Press. Summary Date:9/20/2011 1:31 AM Slug:BC-World Markets Headline:Asian stocks dented by pessimism over Europe
