HONG KONG (Reuters) - Asian stocks fell to one-week lows on Monday, dragged down by financial shares as persistent credit worries offset an influential U.S. report that suggested the world's biggest economy was coping with a housing slump.

Those concerns are set to weigh on markets in Europe, where financial bookmakers expect Britain's FTSE 100, France's CAC 40 and Germany's DAX to open lower.

Investors scurried to the relative safety of government bonds, driving yields lower, and pinned the dollar near a record low versus the euro on concerns about losses at big U.S. financial firms.

Banking giant Citigroup (NYSE:C - News), whose chief Charles Prince resigned, said it may write off $11 billion of subprime mortgage losses. Last week, Merrill Lynch (NYSE:MER - News) ousted its chief, Stanley O'Neal, following an $8.4 billion write-down.

"The rekindled fears of the subprime problems in New York are dragging down the market," said Tsuyoshi Segawa, equity strategist at Shinko Securities in Japan.

Both gold and oil took a breather after recent surges, with bullion trading near $803 an ounce, off Friday's peak of $807.70. U.S. crude hovered around $95 a barrel, but was still within sight of a record high $96.24 set on Thursday.

Tokyo's Nikkei average dropped 1.5 percent to a seven-week closing low, while MSCI's measure of other Asia Pacific stocks fell 1.4 percent by 0614 GMT, after earlier touching levels last seen on October 25.

The MSCI index has fallen nearly 5 percent from an intraday record set on November 1 following a widely expected U.S. rate cut.

FINANCIALS EXTEND SLIDE

Investors continued to sell financials on worries that banks may face further losses from exposure to U.S. subprime mortgage-related assets.

Japan's top bank Mitsubishi UFJ (Tokyo:8306.T - News), Australia's newly listed Macquarie Group (ASX:MQG.AX - News) and South Korea's Kookmin Bank (060000.KS) fell 3-5 percent. MSCI's index of financial stocks in the region slid 1.8 percent.

Some energy firms bucked the weaker trend as investors bet that high crude prices will boost their profits.

Japanese oil developer Inpex Holdings (Tokyo:1605.T - News) climbed 1.6 percent, Australia's Woodside Petroleum (ASX:WPL.AX - News) gained 0.3 percent and Santos (ASX:STO.AX - News) added 2.7 percent.

Shares in PetroChina (Shanghai:601857.SS - News), the world's second-largest oil producer, made a booming debut in Shanghai, tripling in value to 48.62 yuan at one stage, but its Hong Kong-listed shares (HKSE:0857.HK - News) fell 6.6 percent, tracking a general selloff there.

The strong debut gave PetroChina a market value of around $1 trillion, double the world's second biggest company, rival oil giant Exxon Mobil (NYSE:XOM - News), at $488 billion, although only 2 percent of its shares are traded on the Shanghai market.

Citigroup (Tokyo:8710.T - News) enjoyed a positive start on the Tokyo Stock Exchange despite the write-down, rising about 5 percent.

Hong Kong's Hang Seng Index was the biggest decliner among major Asian markets, falling 3 percent by the midsession, as investors worried about a delay to a highly anticipated plan to allow mainland Chinese investors to trade directly in the city's stocks.

Beijing has also told asset managers preparing to launch overseas stock investment funds to cut their exposure to Hong Kong because of fears share prices in the territory may overheat, sources close to the matter told Reuters.

Pakistani stocks slipped 1.6 percent in morning trade after President Pervez Musharraf imposed a state of emergency on Saturday.

DOLLAR DEFENSIVE

Upbeat data showing the world's biggest economy added 166,000 non-farm jobs in October did little to lift a struggling dollar, as investors instead took their cue from losses in major U.S. financial firms.

The euro traded at $1.4485, keeping sight of a record high near $1.4530 set on Friday and eased to 166.21 yen, within a 165-167 range seen in the last few sessions.

Against the yen, the dollar slipped to 114.73 yen from near 115 yen in late New York trade on Friday.

"The market is looking for some kind of a trigger to accelerate the dollar's fall, so it is not paying much attention to economic data," said a senior trader at a big Japanese trading house.

Benefiting from the flight to safety, safe-haven Japanese government bonds (JGBs) rose, driving their yields lower. The benchmark 10-year JGB was yielding 1.575 percent, down 1 basis point.