Stocks fell 4.9% in Japan, 6.0% in South Korea, 3.4% in Singapore and Hong Kong, 4.4% in Taiwan, 4.5% in Pakistan, and 4.3% in Australia. By contrast, European bourses are steady, as investors await the ECB decision at 12:45 GMT, which is expected to involve a 50-basis point rate cut to 2.0%.

The New Zealand dollar fell another 0.6% against its U.S. counterpart in continuing reaction to S&P's warning about a possible ratings downgrade. The U.S. dollar is down 0.5% against the Canadian dollar, -0.4% against the Aussie dollar, -0.2% relative to sterling and off 0.1% versus the yen. EUR/USD is unchanged.

The 10-year JGB yield slid 3.5 basis points to 1.225%.

Oil rose 1.1% to $37.68 per barrel, and gold gained 0.5% to $812.50 per ounce.

Japanese core domestic machinery orders fell by a record 16.2% between October and November and by 27.7% from a year earlier. Foreign orders for machinery declined almost as much, 14.4% on month and by a whopping 44% from November 2007. Concerns about a return to deflation were fanned by this report and news of a 1.2% monthly decline in corporate goods prices in December. The domestic CGP rose just 1.1% in the year to December, down from 12-month gains of 2.8% in November and 7.4% last August.

A 43.9K decline in full-time jobs in Australia last month has amplified fears of a recession. The jobless rate ticked up to 4.5%, highest since March 2007, from 4.4% in November and 4.3% in October. A jump in part-time workers limited the drop in overall employment to a smaller-than-expected 1.2 thousand.

Consumer prices in Euroland slid 0.1% m/m and rose 1.6% in the year to December, the lowest 12-month rate of rise since October 2006. These final results matched preliminary findings but the drop from 2.1% inflation in November would have been even greater if not for seasonal mark-ups in German package tours and accommodation costs. German consumer prices rose 0.4% on a non-adjusted harmonized monthly basis but fell by 0.3% when seasonally adjusted. German inflation swung from 2.7% at a seasonally adjusted annualized rate in the first half of 2008 to a 0.6% annualized rate of decline in 2H08. Core Ezone CPI inflation ticked down to 2.1% in December from 2.2% in November. Energy prices fell 4.7% on month and by 3.7% from December 2007.

There were other consumer price data released in Euroland. Spain's CPI fell 1.1% m/m and by a whole percentage point to 1.4% year/year, lowest since mid-1969. Italian consumer prices dipped 0.1% m/m and rose 2.4% from December 2007, down from 2.7% in the year to November and 3.6% in October. Portugal's CPI dropped by 0.5% in December. Such rose 0.8% in the year to December, much less than the 2.6% average advance in 2008 as a whole.

Russia's rouble underwent its fourth mini-devaluation in five days and is off 5.5% so far this year against its target basket. It is falling much faster than expected.

Spanish house prices fell 3.2% in the year to December. Dutch retail sales fell 1.5% in November from a year earlier versus a 4.1% increase in the year to December 2007. Dutch exports fell 11.2% in November. Romanian industrial production plunged 11% in November. Ukraine industrial output fell by 26.6% in the year to December.

British construction orders were 9% lower in September-November than in June-August and down 27% from a year earlier.

Turkey's central bank also meets today and is likely to cut interest rates.

South Korean import prices dropped by 5.7% in December, cutting the 12-month rise to 22.4% from 32.0% in November and 47.1% in December.

The Japanese government formally scrapped the goal of a balanced budget by fiscal 2011, pushing such back to fiscal 2018. The deficit next fiscal year is targeted at 4.2% of GDP. Japan's largest bank is taking a loss of at least $3.2 billion. The BOJ is considering the purchase of corporate bonds.

South Africa's PMI of 40.1 in December, although up from 39.5 in November, remained far below the 50 line of demarcation between expansion and contraction.

The Chairman of JP Morgan, Jamie Dimon, said the worst of the economic mess still lies ahead.

U.S. producer prices and jobless claims are due at 13:30 GMT, and the Philly Fed and Empire State indices arrive today too. But the main event belongs to the ECB, whose announcement comes at 12:45 GMT followed by a press conference at 13:30 GMT.