UPDATES ON SEPT 16 2008

SEPT 16 TUESDAY

Asian Stocks, U.S. Dollar Drop, Treasuries Gain, on Lehman, AIG .

Asian stocks plunged the most in eight months, the dollar fell

and Treasuries rose as debt rating downgrades threatened

American International Group Inc.'s efforts to survive a

credit-market slump.

Oil fell to a seven-month low and the cost to protect corporate

bonds from default surged on concern the credit turmoil will

tip the global economy into a recession. The won slumped 4.6

percent to 1,160 per dollar, leading declines in emerging-

market currencies.

Markets in Japan, China, Hong Kong and South Korea were

shut for public holidays yesterday, giving investors their

first opportunity to react to the bankruptcy filing by Lehman,

the fourth-largest U.S. investment bank. At least seven

Japanese banks lent the company a total of $1.62 billion,

according to the Chapter 11 filing by Lehman.

Yields on U.S. two-year notes dropped 5 basis points, or 0.05

percentage point, to 1.69 percent, according to bond broker

BGCantor Market Data. Futures contracts on the Chicago

Board of Trade indicate the odds of a quarter-point Fed

rate cut today surged to 68 percent from zero percent a

week ago. Japanese five-year government bond yields

fell 11.5 basis points to 1 percent.