Asian stock markets were mixed today as investors awaited the outcome of a US Federal Reserve meeting that some analysts predicted would see interest rates slashed to close to zero. The Fed was expected to cut the base rate by at least 50 basis points to 0.50 per cent, which would be an all-time low, although there were some pointers to a 0.75 percentage point cut. Tokyo closed 1.12 per cent down and Sydney lost one per cent. However Hong Kong was 0.2 per cent higher at midday and Seoul's KOSPI added 0.3 per cent. Regional markets had opened lower, tracking Wall Street, as a tumble in Japanese business confidence and new signs of a China slowdown underlined worries in the region. Those concerns deepened on news that HSBC, Europe's biggest bank, and other major lenders faced heavy exposure to the alleged US$50bn (Dh184bn) pyramid scheme said to have been run by one of the biggest names in US investing. "The tone is reasonably positive but that could change quickly," said Byron Burke, a broker with ABN Amro Craigs in New Zealand. The US Federal Open Market Committee was expected to cut its base lending rate from the current level of 1.0 per cent when its two day meeting concludes later today, even if the move would be largely symbolic. Ian Shepherdson, at High Frequency Economics, said: "It would be surprising if the Fed were to do anything other than cut the funds rate by 50 basis points. "We think the case for cutting even further is very strong but (Fed chairman Ben) Bernanke and his colleagues may want to keep something in reserve." However, futures market trading suggests a strong likelihood of a cut to 0.25 per cent, below the super-low Japanese rate of 0.3 per cent. While some dealers thought the pre-Christmas lull was kicking in, sentiment was affected by the seemingly endless string of bad news coming out of the United States. The allegation of a pyramid fraud against Wall Street legend Bernard Madoff took on new dimensions overnight as some of Europe's biggest banks said they had exposure to his firm, which US authorities said would be liquidated. HSBC said it had exposure of about $1bn, while Europe's second-biggest bank Santander said it had $3bn exposure to Madoff Invest Securities. Fortis Bank Netherlands said it could lose $1bn from the alleged scam, even though it had no direct exposure to Madoff's company. European shares dropped Monday on the news, with the CAC 40 in France off 0.87 per cent and the Dax in Frankfurt down 0.18 per cent. London's FTSE 100 was flat, off 0.07 per cent. The Dow Jones Industrial Average lost 0.75 per cent while the Nasdaq tumbled 2.1 per cent. The woes mounted yesterday as Japan's central bank said business confidence had suffered its sharpest drop in three decades. China, which announced that industrial output in November rose at its slowest pace in a decade, said that urban fixed asset investment also slowed slightly last month today. Meanwhile there has been no firm progress on a possible bailout for the struggling Big Three US automakers -- General Motors, Ford and Chrysler. The White House said Monday it was still studying its options. Lawmakers have said time is running out for the auto giants, and traded blame with union chiefs over last week's collapse in the Senate of a short-term $14bn rescue. The White House has now said it is ready to consider dipping into the $700bn Wall Street bailout agreed earlier this year. The global financial crisis and the economic slowdown have hit share markets worldwide hard this year, and every major market has suffered big losses. The Dow Jones is off 35 per cent, Hong Kong's Hang Seng is down 46 per cent and the Nikkei in Tokyo has lost almost 44 per cent since the beginning of the year. * AFP