Singapore: Stocks tumbled across Asia as panicky investors feared a US recession could derail global economic growth, and a sharp drop in US stock index futures pointed to heavy selling in New York later on Tuesday.
Share markets from Tokyo to Sydney slumped 5-7 per cent, with the Australian market suffering its worst-ever one-day fall, and India's benchmark Sensex crashed more than 11 per cent, triggering a trading halt.
Industrial metals such as zinc and copper plunged and oil fell well below recent record highs, prompting investors to flee to safe-haven government bonds.
Billionaire investor George Soros said the world was facing the worst financial crisis since World War II. and the United States was threatened with recession.
"We really do have a serious financial crisis now," Soros told Austrian daily Standard in an interview.
"It's like a funeral in here," said Ken Masuda, senior equities dealer at Shinko Securities in Tokyo. "No one knows what's going to happen tonight in New York. It's like we've gone blind, you don't know what's coming.
"Until we see New York, all we can do is sell," he said.
U.S. stock index futures fell around 4.5 percent, signalling a sharp sell-off on Wall Street later.
The yen hit a 2-1/2-year high against the dollar at 105.61 yen as investors reduced their exposure to risky, higher-yielding assets. The strong yen hit Japanese exporters such as Toyota Motor Corp, Sony Corp and Canon Inc.
MSCI's All Country World Index fell 1.1 percent to its lowest since November 2006, after European shares tumbled nearly 6 percent on Monday, their biggest one-day slide since the Sept. 11, 2001 attacks in the United States. The MSCI All Country index has dropped more than 18 percent since its November peak.
MSCI's Emerging Market index, which on Monday had its worst daily fall since August, shed 3.5 percent.
Japanese treasuries surged as alarmed investors sought the relative safety of government debt. March 10-year futures rose 0.3 point to 138.77 after earlier touching 138.94, the highest since September 2005.
The widely-followed iTRAXX Asia ex-Japan high-yield index, a key measure of risk aversion, widened, and some investors called on central banks to restore confidence.
"The market is looking for news to provide a circuit breaker to the downward spiral, whether it's reinforcements from governments or intervention from central banks," said Matt McKeith, head of equity dealing at First State Investments in Hong Kong.
Indian Finance Minister Palaniappan Chidambaram urged investors to stay calm, insisting the fundamentals of the economy remain strong.
The Bank of Japan kept interest rates at 0.5 percent as expected and is set to warn of slower growth in an economic review due later.
BEAR MARKET FEAR
US equity markets, shut on Monday for a holiday, ended Friday with their worst weekly performance since mid-2002, while Asian and European stocks dropped sharply on Monday, with investors unconvinced by Washington's proposed $150 billion fiscal stimulus package.
Japan's Nikkei was down 5 percent by 0510 GMT, having hit a two-year low. The index has shed around 17 percent this month alone as fears deepened that the US subprime mortgage crisis will drag global financial markets lower.
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South Korea's technology stocks, heavily dependent on the US export market, were mauled, pushing the main stock index down more than 6 per cent to its lowest since May. The Korea Exchange briefly halted programme selling orders on the main bourse to ease volatility.
Hong Kong blue chips spiralled lower, sliding 8 percent, with US recession fears dragging bellwether bank HSBC Holdings to lows not seen since October 2003.
Hong Kong-listed shares in mainland companies sank 11 percent. The Hang Seng Index is down about 30 percent since a recent peak in late October and off 19 per cent this year.
The president of China's sixth-largest bank, China Merchants Bank Co, told Reuters on Monday that earnings at Chinese banks will probably be hit this year by the snowballing US subprime mortgage crisis and Beijing's moves to cool the economy.
"News like this suggests that damage may be spreading in developing markets including China, and this is worsening the overall sentiment in financial markets," said Toshiyuki Suzuki, a New York-based strategist at Mitsubishi UFJ Bank. "It appears that these markets, too, will not be able to escape the impact of the wave of worsening international economies."
Australia's S&P/ASX 200 index lost 7 percent in its biggest-ever one-day percentage drop to record its 12th straight session of declines.
Mining stocks, sensitive to any economic slowdown, led the decline. BHP Billiton fell 4.9 per cent and Rio Tinto tumbled 11 percent.
Shanghai copper and zinc futures fell by their 4 per cent daily limits.
Oil deepened losses as global stock markets tanked. London's Brent crude fell half a dollar to $87 a barrel by 0520 GMT.
"This is a meltdown. The weakness is spreading and there is nowhere to hide outside government bonds and, of course, cash," said MF Global analyst Edward Meir.
"But this could be the last big capitulation before prices steady -- this might a selling climax, but it could still last all week."
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