THE peso and share prices weakened yesterday as the shock waves from the US financial crisis continue spreading. The peso hit a low of 47.30 to the dollar but managed to close at 47.04 from Thursday’s close of 47.

The market continued to be well supplied with dollars with the total transactions at the Philippine Dealing System reaching $742.70 million.

The Philippine Stock Exchange index was down 46.68 points to 2,566.21, a 1.68 percent drop.

Trading reached P2.3 billion.

"The prevailing fear is expected to cloud over the market," brokerage firm Accord Capital Equities, Inc., told investors.

Most active traded Philippine Long Distance Telephone was down P30 to P2,690. Alliance Global was down P0.40 to P3.50. Energy Development Corp. was down P0.50 to P4. Bank of the Philippine Islands was down P1 to P46.50. Ayala Land was down P.30 to P9.10.

All over Asia, stocks fell while the yen rose to a two-year high against the euro on Friday on fears the $700 billion financial rescue bill still needing final US government approval may not be enough to keep the global economy from falling into recession.

The flow of credit remained practically frozen in money markets, leading to a scramble for US dollar funding that has the currency on track for its largest weekly gain in 16 years against a basket of major currencies.

The euro remained under pressure after dropping to a 13-month low against the dollar on Thursday on indications the European Central Bank is leaning toward cutting interest rates after recent bank failures threatened the euro zone economy.

Raw materials prices tumbled on expectations that demand from big consumers such as the United States and China will fall. Copper prices were on track for a record decline this week, down around 14 percent, and oil was down 12.5 percent for the week, its biggest five-day drop since December 2004.

"Economic concerns are mounting and regardless of whether the bailout plan is accepted in the House later today this will not change," economists with Calyon said.

"The US dollar is set to maintain a firm tone in the Asian session, especially against European currencies as both economic and financial sector concerns mount."

Japan’s Nikkei share average fell 1.2 percent, led by shares of car makers Honda Motor Co. and Toyota Motor Corp. following a big drop in US sales earlier this week.

"With the US auto sales down about 30 percent, it’s become clear that financial problems are finally spreading to the real economy," said Takahiko Murai, general manager of equities at Nozomi Securities in Tokyo.

The MSCI index of Asia-Pacific stocks outside of Japan slipped 0.8 percent and was off 6.9 percent on the week. Regional equity markets have outperformed the All-Country World Index, which sank 8.8 percent this week to the lowest in three years

Hong Kong’s Hang Seng index dropped 2.6 percent, dragged down by bank stocks as tight lending conditions spread fears one of Asia’s main financial hubs would be hit hard.

The euro was down 0.3 percent to 145.15 yen after earlier slipping below 144.88 yen to the lowest in two years, as investors continued to find refuge in the yen and the Swiss franc.

The dollar slipped 0.3 percent at 105 yen and was down 0.3 percent to 1.1320 Swiss francs The euro was steady against the dollar at $1.3830 after dropping to around $1.3750 on Thursday.

US economic data amplified warnings that a recession is near, and European Central Bank President Jean-Claude Trichet said Europe’s economy was weakening, opening the door for the first interest rate cut there in five years.

Business leaders from hoteliers to automakers and in sectors as far-flung as farming and mining warned that a crisis that began with risky lending to the overheated US housing market was on the cusp of a dangerous new phase.

"There are thousands, maybe tens of thousands of jobs at stake in our company alone, and we are typical," Marriott International chief financial officer Arne Sorenson said in urging Congress to pass the bailout.

Underscoring the uncertainty, Wall Street’s "fear barometer" — an index that measures the volatility priced into stock option prices — spiked to a record close.

US factory orders tumbled in August and the number of workers seeking jobless benefits rose in the latest week to a seven-year high.

"The economy is turning down pretty fast," said Nigel Gault, US economic research director at Global Insight.

Even if the bailout passes Congress, skeptics question whether the measure can stop more housing-related dominoes from toppling in the United States.

"We have a flood and there are guys showing up with mops and pails. It starts to sop it up. But it’s not the final answer," said Howard Lutnick, chief executive of bond brokerage Cantor Fitzgerald.

Others, including investor George Soros, said the key was grappling with the root of the crisis: falling home prices and a wave of foreclosures that claimed over 2 million American homes last year.