HONG KONG - INVESTORS gave short shrift to hopes of the US Federal Reserve rescuing the world economy with a further interest rate cut on Wednesday and continued to bet on a bad year, selling stocks and the dollar and buying bonds.

Investors are counting on the Fed announcing a 50 basis point cut in US interest rates at about 3am Singapore time (1915 GMT) on Wednesday, which would lean further on the dollar to give the US economy a second boost in eight days, rounding off one of the steepest rate-cutting episodes since the early 1980s.

Before the Fed takes centre stage, a first estimate of US fourth-quarter gross domestic product at 1330 GMT will set the mood for financial markets, providing clues on whether the world's largest economy can avoid a recession.

Up to 759.7million shares exchanged hands. Losers beat gainers 341 to 201.

KUALA LUMPUR
Malaysian share prices closed 0.3 per cent lower on Wednesday amid cautious trade ahead of the US Federal Reserve's decision on interest rates later in the day, dealers said.

The Kuala Lumpur Composite Index finished the session down 4.42 points at 1,384.08, off a high of 1,400.90.

HONG KONG
Hong Kong share prices closed down 2.6 per cent on Wednesday in volatile trading ahead of an expected US interest rate cut, dealers said.

The Hang Seng index closed down 638.11 points at 23,653.69 after an early rally faded.

Turnover was 105.08 billion Hong Kong dollars (S$19.10 billion).

'The market is getting knocked around by speculation ahead of the Fed meeting,' said Howard Gorges, the vice-chairman of South China Securities.

'Nobody wants to be bold and buy stocks after the volatility we have seen in recent sessions.'

The Fed announces its interest rate decision later on Wednesday. It made an emergency cut in borrowing costs last week amid a global stocks meltdown that hammered Asia hard.

SHANGHAI
Chinese share prices closed mixed on Wednesday, with the Shanghai bourse lower after heavy-weight China Life Insurance projected lower-than-expected earnings growth, dealers said.

They said the market opened firmer following an overnight advance on Wall Street amid expectations of further rate cuts by the Federal Reserve, but later fell as financial stocks lost ground.

The benchmark Shanghai Composite Index, which covers both A and B shares, closed down 40.10 points or 0.90 per cent at 4,417.85 on turnover of 93.57 billion yuan (S$18.20 billion).

TOKYO
Japanese share prices closed down 0.99 per cent on Wednesday, giving up early gains, after disappointing industrial output and corporate earnings renewed concerns about the economic outlook, dealers said.

The market opened higher on Wall Street's overnight gains, but players turned cautious as they waited for the end of a two-day Federal Reserve meeting expected to slash interest rates further to ward off a US recession.

The Tokyo Stock Exchange's benchmark Nikkei-225 index fell 133.83 points to close at 13,345.03.

The broader Topix of all first-section shares finished down 8.62 points or 0.65 per cent at 1,320.11. -- AFP, REUTERS