ASIAN stocks dropped yesterday for a third day after Japan's largest car makers cut global production and President George W. Bush said the United States will face a "long and painful" recession unless a financial bailout is agreed.

Honda Motor Corp and Toyota Motor Corp fell more than 2 percent after reducing output because of slumping US demand for trucks and sports utility vehicles.

BHP Billiton Ltd, the world's biggest mining company, declined 3.9 percent after oil and copper dropped. Mitsubishi UFJ Financial Group Inc led banks lower as lending rates jumped on concern that US law makers may delay or dilute the US$700-billion rescue plan.

"The US bailout plan is moving slowly and markets will be in limbo until there's better clarity," said Daphne Roth, Singapore-based head of equity research in Asia at ABN Amro Private Bank.

The MSCI Asia Pacific Index declined 1 percent to 115.12 in Tokyo, extending a two-day 0.8-percent retreat. All of the index's 10 industry groups fell. The gauge has dropped 27 percent this year.