Asian stocks tumble as crisis worsens

Asian stock markets plunged again in early trade Tuesday as fear-stricken investors saw no end in sight to the crisis rocking global financial markets.

Tokyo's Nikkei index briefly tumbled more than five percent, dropping below the key 10,000 points level for the first time in more than four years on fears that government efforts to end the crisis may be too little, too late.
Across the region dealers' screens were awash with red as markets suffered heavy losses in the wake of steep falls in the United States and Europe.

"The market is still panicky," Credit Suisse strategist Satoru Ogasawara said. "Many people are simply dumping shares."

But some markets managed to claw back from their earlier lows, with Tokyo recovering somewhat to show a loss of 3.1 percent by the lunch break.

Elsewhere, Shanghai slid 3.34 percent, Singapore dropped 1.39 percent and Seoul slipped 0.6 percent.

"Market volatility continues to eat up investor sentiment, as foreign investors are continuing their sell off in the market," said Bae Sung-young, an analyst at South Korea's Hyundai Securities.

In Sydney the market surged 2.4 percent after Australia's central bank slashed interest rates by a hefty one percent in a dramatic move aimed at shielding the economy from the financial turmoil. It had been more than three percent down in early trade.

The yen continued to outshine its rivals on the currency markets as investors sought shelter from the storm raging on global markets.

"Investors are panicking. They don't know what's going to happen next," said Ryohei Muramatsu, manager of Commerzbank's Group Treasury Asia in Tokyo.

The plunges on global markets reflected a lack of confidence in the recent efforts by the US and European authorities to try to ease fears about credit flows drying up and to stabilise their banking systems, he said.

Market players "doubt whether the rescue measures by governments are going to work. Even if they do, they are coming too late. Action should have been taken a lot sooner," said Muramatsu.
Crude oil prices remained below 90 dollars a barrel in Asia Tuesday on expectations that the turmoil will reduce demand for energy.

Overnight on Wall Street, the Dow Jones index fell as much as 800 points during the session, slipping below the key psychological level of 10,000 for the first time since 2004.

But the market pulled back from the edge of the abyss in a highly volatile session, closing down 369.35 points, or 3.58 percent, at 9,955.50.

Traders were looking for any signs that authorities may take coordinated action to try to quell the turmoil, and in particular whether they will slash interest rates to shore up market confidence and global economic activity.

The heads of the central banks of the United States, the eurozone and the United States were due to speak later in the day, while finance chiefs from the Group of Seven finance ministers are scheduled to meet Friday in Washington.

Markets are crying out for action by the G7 to stabilise the markets, said Toshihiko Matsuno, deputy equity general manager at SMBC Friend Securities.

"I think we are seeing the market demanding authorities do something, take some kind of coordinated policy action," Matsuno said.

But he added: "People are not as panicky as they were during Black Monday," referring to the 1987 global stock market crash.

European markets had suffered a beating on Monday amid signs of fresh trouble in the region's banking sector.

The London FTSE 100 fell 7.86 percent, the Paris CAC 40 index slumped 9.04 percent and the Frankfurt DAX sank 7.07 percent.

Iceland's stock market suspended trading in all financial shares including three major banks on Monday amid government talks on a possible rescue for the banking sector. Russia's dollar-denominated RTS stock market suffered its worst-ever one-day fall, closing down 19.10 percent.

"We are seeing flight to quality from riskier assets. Some people might be picking up bargains, but there is no telling how long they will hold onto the shares they bought at low prices," said Credit Suisse's Ogasawara.

"When you have financial worries like we do now, you cannot predict what will happen next."

AFP