<div><p>Lingering concerns that Beijing will move to tighten liquidity fed into regional stock markets Tuesday, which fell as investors overlooked a positive result on Wall Street.</p><p>Markets have been on edge since China announced last week that its economy expanded at a better-than-expected pace last year, while inflation was soaring and bank lending was at a record high.</p><p>The region has also been on a downward slope since US President Barack Obama on Thursday launched a series of initiatives to restrict what he called the "excessive" bank risk-taking that led to the global downturn.</p><p>China's strong figures have led to speculation that authorities will move to rein in the red hot economy by staunching lending or raising interest rates.</p><p>Shanghai was 2.0 percent lower in the afternoon as banks extended losses.</p><p>"More investors are moving to the sidelines, as they remain cautious of more policy headwinds," Zhang Qi from Haitong Securities told Dow Jones Newswires.</p><p>The concerns spilled over into Hong Kong, which lost 1.60 by the break.</p><p>There is a growing expectation that China will lift interest rates soon after reporting economic expansion of 8.7 percent in 2009 and 10.7 percent in the fourth quarter of the year. Data also showed inflation at a 13-month high.</p><p>Beijing is also keen to put the brakes on runaway lending last year that has led to fears of asset bubbles and possible bad debt.</p><p>In a bid to calm fears over tightening, the People's Bank of China Tuesday kept the yield on its benchmark one-year bills unchanged, after having raised it twice in the previous two weeks.</p><p>However, the yen shot up in Asian trade on worries that Chinese moves to curb lending could derail a still-fragile global economic recovery.</p><p>The dollar slid to 89.72 yen in Tokyo afternoon trade from 90.22 in New York late Monday. The euro dropped to 1.4081 dollars from 1.4149 and to 126.36 yen from 127.69.</p><p>The stronger local currency led Tokyo lower, with the Bank of Japan's decision to keep interest rates unchanged at 0.1 percent overlooked as the yen strengthened.</p><p>The Nikkei dropped 1.78 percent, or 187.41 points, to 10,325.28.</p><p>However, the central bank upgraded its growth forecasts slightly, predicting the economy would shrink 2.5 percent this financial year to March before rebounding 1.3 percent next year.</p><p>In October the bank had predicted a 3.2 percent contraction this year and 1.2 percent expansion next year.</p><p>Seoul dropped 1.97 percent, or 32.86 points, to 1,637.34 after data showed the South Korean economy grew more slowly in the December quarter than in the previous three months. The market is at a seven-week low.</p><p>Taipei closed 3.48 percent, or 274.18 points, off at 7598.81, its lowest level since November 30.</p><p>Singapore was 1.58 percent lower in the afternoon.</p><p>Dealers had been given a good start after Wall Street broke a losing streak overnight -- rising 0.23 percent -- on optimism that Federal Reserve chairman Ben Bernanke will be confirmed in his post for a second term.</p><p>Doubts also emerged last week about Bernanke after key Democratic senators said they would oppose his bid for a second term.</p><p>Critics say he was ineffective at best during the 2008 global meltdown and turned a deaf ear to ordinary people's concerns while promoting a massive Wall Street bailout package. However, Obama has said the Fed chief "has my strongest support."</p><p>Oil was lower, with New York's main futures contract, light sweet crude for delivery in March, down 86 cents to 74.40 dollars a barrel.</p><p>London's Brent North Sea crude for March delivery dropped 80 cents to 72.89 dollars.</p><p>Gold opened higher in Hong Kong at 1,101.00--1,102.00 US dollars an ounce, up from Monday's close of 1,100.00-1,101.00 dollars.</p><p>Markets in Sydney and Mumbai are closed Tuesday for public holidays.</p><p>In other markets:</p><p>-- Manila shed 0.41 percent, or 12.26 points, to 2,955.70.</p><p>First Philippine Holdings was unchanged at 48 pesos while Philippine Long Distance Telephone dropped 0.19 percent to 2,680 pesos.</p><p>-- Wellington rose 0.64 percent, or 20.41 points, to 3,209.06, ending a seven-day losing streak.</p><p>Market heavyweights boosted the index, with Telecom up five cents to 2.44 dollars and construction company Fletcher Building rising 16 cents to 8.18.</p><img src="http://admatch-syndication.mochila.com/images/ad.gif?aid=67800218&bid=informcom" /></div><div id="copyright"><div>

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