Financial stocks, shipping lines and property stocks declined as fears of a recession in the U.S. increased.

The Wall Street Journal reported yesterday that the government in China called off the planned investment in troubled Citigroup by China Development Bank due disagreements in Beijing.

China Development Bank was considering to investing $2 billion in Citigroup.

Reuters news reported yesterday that Bank of Communications is in talks to buy Life-CMG Insurance pending regulatory approval. Life-CMG Insurance is a 50-50 joint venture between Commonwealth Bank of Australia and China Life Insurance.

The Standard online news reported today that China Insurance Regulatory Commission said yesterday premium income last year soared above 14.4% market consensus by 27% from the previous year to Rmb700 billion.

Lehman Brothers said in a research note today that Hong Kong residential property prices will reach a peak last seen in 1997 by the end of next year on falling interest rates and a negative deposit rates. Hong Kong inflation rate is running at a higher rate than the bank deposit rates.

“With rates expected to fall another 125 basis points in 2008, we forecast that overall home prices will rise 35% this year and another 15% in 2009, returning overall prices to 1997 peak levels,"""""""" said Lehman Brothers.

The bank also added home prices rose 24% in 2007, while the stock prices of developers soared 69%.

However, property stocks such as Sino Land fell today on profit taking.

Financial stocks fell after Citigroup announced yesterday that it has realized a record fourth quarter net loss of $9.83 billion compared with a $5.1 billion profit from a year earlier.

Citigroup also doubled its forecast on write-downs linked to subprime losses to $18.1 billion. HSBC Holdings slumped 4.8% to HK$115, the biggest fall in six years.

Goldman Sachs Group also said today in an e-mailed statement HSBC will need to add $13 billion to provisions for subprime losses. The company also cut its price estimate of the stock.

Shipping lines also fell on mounting concerns that global economic growth will slow after the U.S. Commerce Department said retail sales fell 0.4% in December from November but rose 4.1% from a year ago.


[R]5:00AM New York, 7:00PM Tokyo - Japan’s private sector machinery orders fell 2.8% in November. Producer prices climbed 2.6% in December.[/R]

In Tokyo trading Nikkei 225 plunged 3.35% or 468.12 to 13,504.51, while the broader Topix Index slid 47.83 to 1,302.37.

In the first section of the Tokyo Stock Exchange 13.6 billion shares worth 1.5 trillion yen were traded and in the second section 484 million shares worth 6.4 billion yen changed hands.

Of the Nikkei 225 stocks 22 gained, 199 declined, and 4 were unchanged.

Japan’s Cabinet Office reported today that the total value of machinery orders received by 280 manufacturers operating in the country slipped 5.9% in November from the previous month on a seasonally adjusted basis to 2.6 trillion yen.

Private sector orders, excluding volatile orders, plunged 2.8% in November from the month earlier on a seasonally adjusted basis to 1.04 trillion yen.

Also manufacturing orders declined 1.7%, while non-manufacturing orders rose 3.1% worth 512 billion yen and 571.5 billion yen correspondingly.