RPT-GLOBAL MARKETS-Asia stocks tumble on commodities, Obama plan

* Risk appetite suffers on Obama plan to regulate banks

* Japan shares fall 2.91 percent on resource, export stocks

* Yen reaches nine-month high against euro; 5-wk high vs dlr (Repeating to more subscribers)

By Raju Gopalakrishnan

SINGAPORE, Jan 22 (Reuters) - Japanese shares .N225 fell almost 3 percent on Friday as the yen surged and resources shares dropped after U.S. President Barack Obama threatened tough new restrictions on banks, sending jitters across markets.

Other Asian markets were also badly hit by the U.S. proposal, which would squeeze banks' profits. South Korea's KOSPI .KS11 was down 1.87 percent while Australia's main index .AXJO was down 1.88 percent.

Commodity prices were also down, with gold XAU= under pressure because the proposed regulations were seen as diminishing capital flows from banks, which have provided liquidity for investors.

Shanghai copper was expected to open lower after three-month copper on the London Metal Exchange CMCU3 tumbled to a four-week low on Thursday, while crude oil CLc1 slid on a build-up in U.S. gasoline inventories.

U.S. stocks fell as much as 2 percent, the worst one-day percentage fall since October, as financial shares in particular were hit by President Barack Obama's plan to restrict banks' ownership and investment in hedge funds for proprietary profits, which go to the banks themselves, not customers.

The rules would restrict some banks' most lucrative and risky operations, which Obama blames for helping to cause the global financial crisis. See [nN21115923] for more.

"Of course, any sort of market regulation isn't good for the market, and if you start limiting hedge funds that hurts overall market flexibility," said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo.

"I don't think the proposal is very realistic and it's hard to know if it'll ever come to pass, but investors want to wait and see. Today's response is largely just a shock reaction."

Other factors were in operation in Tokyo as well.

Toyota Motor Corp (7203.T) lost 3.3 percent to 4,050 yen after it said on Thursday it would recall 2.3 million vehicles in the United States to fix potentially faulty accelerator pedals, broadening a recall that already ranked as its largest ever.

Shares of Shin-Etsu Chemical (4063.T) lost 6 percent to 4,940 yen after the world's biggest maker of silicon wafers used to make semiconductors reported a 53 percent fall in quarterly operating profit, hurt by weak prices and a strong yen, and it said it expected its annual profit to halve from a year earlier.

Earlier, the dollar lost ground and fell to its lowest in five weeks on the yen JPY=, dropping as far as 89.88 yen before steadying just above 90.00. Support for the dollar is seen around 88.80/90 yen. [nSGE60K0LJ]

The euro, which has been under pressure from Greece's debt troubles, hit a nine-month low against the yen at 126.55 yen EURJPY= but trimmed losses later to 127.20.

The dollar index, however, .DXY =USD was steady around 78.386, with the 78.45/55 zone seen as short-term resistance.

lnvestors flocked to safe-haven government bonds amid the equities sell-off. Benchmark 10-year U.S. Treasuries US10YT=RR rose 14/32 of a point in price overnight before pulling back.

March 10-year Japanese government bond futures rose 0.29 point to 139.27 2JGBv1. The benchmark 10-year JGB yield fell 2.5 basis points to 1.315 percent JP10YTN=JBTC, pulling away from a two-month high of 1.365 percent hit earlier this month. (Editing by Kim Coghill)