Japan's Economic and Fiscal Policy Minister Kaoru Yosano gestures as he answers questions at a press conference in Tokyo on February 16, 2009 after the official figures showed that Asia's largest economy shrank at an annualised pace of 12.7 percent in the fourth quarter of 2008.
HONG KONG — Most Asian stock markets fell Monday, as new figures showed Japan's economy contracted the most in 35 years and Group of Seven finance ministers warned the global slump will drag on through most of the year.
The fourth quarter GDP numbers out of Japan, worse than many forecasts, was a sobering reminder of the toll on Asia's export-driven countries as world demand collapses amid the worst economic downturn in decades. According to the government, the world's second-biggest economy shrank 3.3 percent from the previous quarter, or at an annual pace of 12.7 percent.
Investors also seemed disappointed after finance chiefs from the Group of Seven developed countries finished their meeting in Rome with pledges to work together to boost growth and unemployment, but stopped short of concrete measures.
Increasingly, investors are unconvinced governments around the world are acting quick enough to solve the credit crisis, plummeting consumer demand and other problems at the heart of the economic slowdown, analysts said.
"The global recession is deeper than anticipated. At the same time policy makers are failing to deliver measures to address the problems," said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong. "It seems that what they're doing is too little too late."
Japan's Nikkei 225 stock average edged down 22.45 points, or 0.3 percent, to 7,756.95, and Hong Kong's Hang Seng Index dropped 231.84 points, or 1.7 percent, to 13,322.83. South Korea's Kospi lost 1.4 percent to 1,176.23.
Markets in Australia, India and Singapore also declined, while benchmarks in Shanghai and Taiwan gained.
In Japan, exporters were down on data showing the economy sank deeper into recession.
The result represents the steepest drop for Japan since the oil shock of 1974 and outpaced annual pace declines of 3.8 percent in the U.S. and 1.1 percent in the euro zone. A survey of economists by Kyodo news agency had projected an 11.6 percent contraction.
"It's clearly very shocking data," said Clive McDonnell, head of Asia strategy at BNP Paribas Securities in Hong Kong. "The drop is certainly beyond our own quite negative expectations. (Japan's) policy response has not been as effective."
Shares in Toyota Motor Corp. lost 1 percent, while electronics heavyweight Canon Inc. slid 1.8 percent.
Also weighing on markets were declines on Wall Street last week.
Friday, the Dow fell 82.35, or 1.04 percent, to 7,850.41, its lowest close since Nov. 20. Broader stock indicators also fell, with the Standard & Poor's 500 index down 8.35, or 1.00 percent, to 826.84. The S&P 500 ended the week off 4.8 percent.
U.S. markets are closed Monday for Presidents Day.
In the coming days, investors will be watching President Barack Obama, expected to sign the country's $787 billion economic stimulus measure on Tuesday. He plans to outline steps to stem home foreclosures on Wednesday, though analysts say investor enthusiasm surrounding the pending announcement is fairly low
In currencies, the dollar weakened to 91.74 yen, down from 91.87 yen late Friday. The euro fell to $1.2760 compared to $1.2860.
Oil prices were steady after soaring 10 percent last week, trading 12 cents higher at $37.63 for a barrel of light, sweet crude for March delivery. The contract rose $3.53 to settle at $37.51 a barrel on the New York Mercantile Exchange on Friday.