Asian stocks declined sharply today, as Japanese financials such as Mizuho Financial Group and Mitsubishi UFJ Financial Group were hurt by concerns related to the health of the global credit markets, as well as nervousness ahead of the US. Japan's Nikkei fell 1.77% or 286.11 points at 15,841.31.

Hong Kong's Hang Seng slipped 0.41% or 100.51 points at 24,498.83. Singapore's Straits Times was down 0.34% or 11.99 points at 3,464.32. South Korea's Seoul Composite declined 0.95% or 17.8 points at 1,853.88.

US stocks closed with modest losses on Monday after a light-volume session amid investor nervousness ahead of the Federal Reserve's interest-rate decision Tuesday and as a UK lender's ongoing trouble added to worries about the global credit crunch. Northern Rock PLC, Britain's fifth-largest mortgage lender, saw its stock plunge and customers withdraw billions of dollars after it issued a profit warning Friday and requested emergency funds from the Bank of England.

The market is betting on a rate cut from the Fed when the central bank meets Tuesday, but investors are not completely sure what it will do and what it will say in its accompanying economic statement. Belief that the Fed will only ease 25 basis points instead of 50 is weighing on the market, analysts said. Furthermore, with the major brokerages' third-quarter results yet to be released, investors are uncertain about how badly the summer's stock downturn, souring home loans, and credit squeeze hit the banking industry.

It's possible the Fed won't go through with a rate cut at all if it believes the economy is still growing moderately and that inflation remains a threat, but most investors expect the Fed to cut the benchmark federal funds rate, now at 5.25%, by at least a quarter-point. And because negative economic data have trickled in over the last couple weeks -- such as a decrease of 4,000 jobs in August and weaker-than-expected retail sales -- some anticipate a half-point rate cut.

The Dow Jones industrial average fell 39.10, or 0.29%, to 13,403.42. Broader stock indicators showed somewhat steeper losses. The Standard & Poor's 500 index fell 7.60, or 0.51%, to 1,476.65, and the Nasdaq composite index lost 20.52, or 0.79%, to 2,581.66. The Russell 2000 index, which tracks small company stocks, fell 7.68, or 0.98%, to 775.81. Bonds rose modestly, pushing the yield on the 10-year Treasury note down to 4.47% from 4.48% late Friday.