Asian stock markets recorded some of their most severe losses ever on Monday after the carnage on Wall Street, with Tokyo's Nikkei average closing nearly seven percent lower and South Korea down over 11 percent.
Tokyo's hammering -- its fifth biggest percentage fall ever -- prompted urgent consideration of government intervention to support Japanese share prices, including the use of public funds to support the market.
Worries that U.S. stocks could be in for another hammering on Monday dragged the dollar down to 103.72 yen in Tokyo from 104.75 in New York on Friday, but traders said falling Japanese stocks should limit the yen's progress.
The benchmark Nikkei average plunged 6.98 percent to close at 19,008.64, its lowest close since Jan. 25, and analysts said worse could follow if Wall Street's losses resumed later in the day.
"It's like catching a falling knife right now," Darrell Whitten, head of research at ABN AMRO in Tokyo told Reuters.
The carnage looked set to continue in Europe. In London, on Europe's biggest stock exchange, the Financial Times 100 index was down 4.4 percent in early trading.
South Korea's KOSPI index recorded its worst ever loss, plummeting 11.63 percent to finish at 707.72, and Australia's benchmark S&P/ASX 200 index shed 5.41 percent to 2,943.9 points amid massive volumes.
HONG KONG SHARES TUMBLE 8.55 PERCENT
Hong Kong share prices tumbled 8.55 percent in panic selling Monday triggered by the plunge on Wall Street last week, dealers said.
"There is panic selling in the market," said Marco Mak, analyst at Tai Fook Securities, adding that "the market will remain on the downside depending on the performance of US markets later today."
The key Hang Seng index lost 1,380.39 points to close below the 15,000-point for the first time since January 25 at 14,762.37, on turnover of 15.10 billion Hong Kong dollars (1.94 billion US).
The fall was the largest single-day drop since October 28, 1997, when the index closed down 1,438.31 points, dealers said.
The hi-tech GEM index, set up in March at a base level of 1,000, was down 89.07 points at 609.03 on turnover of 421.25 million dollars.
Hong Kong financial secretary Donald Tsang said there was no cause for worry over the fall in local stocks.
"I do not think worry is the right attitude. I think we have to accept the decisions of the market," Tsang told reporters.
JGBS BENEFIT FROM STOCK FLIGHT
Japanese government bond cash and futures prices surged as investors fled the stock market.
Most-active June 10-year JGB futures jumped to a fresh contract high of 132.41 in the morning, up more than one point from Friday's close, and the yield of the 221st 10-year cash bond sagged to a two-and-a-half month low of 1.695 percent.
The global stock market rout sparked a two dollar an ounce rally in gold prices from Friday's New York close.
Analysts said the rise was likely to be short-lived unless the share tumble continued and triggered concern over the stability of the world financial system, but this was unlikely.
Falling stock markets unnerved metals prices, which continued to edge lower in Asia after copper and aluminum hit six month lows in London Friday.
Panic selling swept Asian stock markets after the biggest ever point-loss hit the Dow Jones industrials on Friday, driving Hong Kong down more than eight percent and Singapore breaking key support at 2,000 in its afternoon session with a nine percent loss to 1,989.84.
Taiwan showed the only immunity in the region, ending the day 1.4 percent higher, but the market had already fallen 5.42 percent on Saturday.
"The key thing is that investor psychology has changed from greed to fear," said HSBC Australia equity strategist John Banos, suggesting there was more pain to come for new economy stocks -- (Agencies)
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