HONG KONG -- Asian stocks and emerging market currencies fell on Thursday, with a recent rebound in investor willingness to take risks jeopardised by dire US private employment data and fears about corporate earnings.

The financial crisis of 2008 has snowballed into a global economic crisis in 2009, with consumer spending crippled, Asian exports collapsing and unemployment rising at an alarming rate.

"We saw a bit of hope earlier that the world may be in for a quick recovery, but the reality is there are still a fair bit of problems in markets," said Lucinda Chan, division director at Macquarie Equities in Australia.

Global equity markets snapped a 10-day rally on Wednesday after a report showed the US private sector shed 693,000 jobs in December, increasing chances the US payrolls report due on Friday will reflect greater job losses than the expected 500,000.

Discomfort with risk taking this time around has not triggered a wholesale move into government bonds, with US Treasuries and Japanese government bonds under pressure on concerns about how much demand investors will have for the slew of fresh issuance needed to finance massive government resuce programs.

Hopes that fiscal stimulus measures will support global growth, which fed the recent stock market rallies around the world, have been tempered by the cold, hard economic reality. Government spending plans and interest rate cuts can take a long time to be fully felt, and company earnings are likely to deteriorate further in early 2009.

Japan's Nikkei share average fell 2.5 percent, after stringing together its longest winning streak since one that ended in April 2006.

Technology shares in particular were under fire after Intel Corp. cut its fourth quarter sales forecast for the second time.

In Japan, Kyocera Corp. was the top drag on the Nikkei, sliding 5.5 percent, while in South Korea, shares of Samsung Electronics was down 1.3 percent.

Taiwan's tech-heavy TAIEX index fell 2.4 percent after a report on Wednesday showed a record 42 percent plunge in exports, spurring the central bank to cut rate unexpectedly by a half-percentage point.

The MSCI index of Asia-Pacific stocks outside Japan was down 1.8 percent, while the All-Country World Index was down 0.65 percent after its longest winning streak since one starting in December 2004 ended on Wednesday.

TOO EARLY FOR RECOVERY TRADES

Equity markets usually turn higher toward the end of negative economic cycles, as investors anticipate turning points well before they take place, sometimes six months prior. Some analysts have cited this as a reason for the strength in demand for stocks, high-grade credit and commodities.

However, the severity of this global slowdown makes seeing into the future an even more treacherous task than it usually is.

"Our judgement is that the end of the global recession remains far enough in the future, and uncertain enough in timing, if not depth, that it is too early to swing fully into recovery trades," JPMorgan asset allocation strategists said in a note.

They recommended sticking with bets on further strength in government bonds, especially shorter maturities in Europe, as well as on US stocks since they will likely benefit from the one-two punch of fiscal stimulus and zero interest rates.

Emerging market currencies weakened as the global equity rally came to a halt, while commodity-related currencies came under pressure after crude oil's biggest single-day percentage decline in more than seven years overnight.

The Australian dollar fell 0.8 percent to $0.7080 after hitting a three-month high this week.

The US dollar rose 1.9 percent against the Korean won and 0.9 percent against the Indonesian rupiah

The US dollar recovered against the euro and other major currencies but pinning down a trend has been difficult so early in the year. The euro was down 0.5 percent to $1.3580

Expectations of even slower demand for raw materials dragged on metals prices, while US crude was steady around $42.70 a barrel after a surprising build-up of inventories unleashed a brutal 12 percent sell-off on Wednesday.

The benchmark 10-year Treasury note yield was at 2.49 percent, down from 2.50 percent late in New York.

The 30-year bond yield rose to 3.05 percent a fresh one-month high.

The returns on some quality corporate bonds were also peeling investors away from the relative pittance offered by Treasuries. For example, US corporate bonds have returned about 4.6 percent over the past month, while high-yield bonds posted returns of about 15 percent in the period, according to Merrill Lynch data.

The 10-year Japanese government bond future dipped 0.13 percent as dealers prepared for an auction of 10-year debt later on Thursday.