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TOKYO - Asian stocks fell sharply Monday as jittery markets took their cue from a slump on Wall Street, where lacklustre US corporate earnings rattled investors still nervous about a credit squeeze.
Even a drop in oil prices failed to calm market nerves after the steep US decline Friday, when worries about the outlook for the world's largest economy grew on the 20th anniversary of the New York market crash.
Hong Kong shares suffered their biggest fall in one day in more than seven years, while Tokyo, Seoul and other major bourses also dropped sharply.
Global finance chiefs said over the weekend that the recent financial market turbulence, high oil prices and a US housing downturn were likely to "moderate" global growth from its recent robust levels.
"Uncertainty about the prospects for the US economy has increased after disappointing earnings amid the credit tightening concerns," said Kazuhiro Takahashi, equity general manager at Daiwa Securities SMBC.
Tokyo led the way lower, dropping more than three percent in early deals as a stronger yen weighed heavily on exporters. Asia's largest market managed to recover some of its losses in late trade to end down 2.24 percent.
On Wall Street the Dow Jones index lost a hefty 2.64 percent on Friday after several major companies, especially in the financial sector, reported soft earnings and showed caution about the profit outlook.
The market has been sensitive to the financial sector given recent US credit market problems. A weak earnings report from banking giant Wachovia, which offered murky guidance going forward, added to market worries.
The dollar also suffered fresh losses after Group of Seven finance chiefs refrained from voicing increased concern about currencies, which markets took as a green light to drive the greenback to a new record low against the euro.
The yen shot higher, hitting Japanese exporter shares, as the latest stock market rout prompted investors to unwind risky bets funded by selling the Japanese unit.
Japanese exporters have benefited greatly from the weakness of the yen, so investors react nervously to any sign of the currency appreciating.
"Japanese share falls resulted from the double whammy of an increased possibility that Japan's exports may dip and a rising yen due to worries about declining tolerance for risk," said Takahashi.
Hong Kong fared even worse, with the benchmark Hang Seng Index closing down 3.7 percent, the biggest single-day fall since April 2000.
Hong Kong has also been hit by nervousness that the market might be overheating after a 36 percent gain in just two months.
Tony Espina, chairman of Hong Kong Stockbrokers Association, said investors were trading "irrationally."
"While it's true that Friday marked the anniversary of a global market crash 20 years ago, there is absolutely no reason for investors to fear a repetition of that catastrophe," he said.
Shanghai closed down 2.59 percent, with the mood also pressured by concern about share supply ahead of a large IPO by Hong Kong-listed PetroChina, the nation's largest oil company.
Seoul fared worse, tumbling by as much as 4.8 percent to the lowest level for about a month at one point, before ending the day 3.4 percent lower.
Elsewhere, Taipei lost 2.61 percent, Manila gave up 3.98 percent and Jakarta slumped 4.3 percent.
Singapore closed down 2.81 percent and Bangkok and Kuala Lumpur both fell 1.4 percent.
"Fears over a recession in the US economy spooked investors around the world," said Chai Chirasevenupraphand, a market strategist at Capital Nomura Securities in Bangkok.
Bucking the trend was Mumbai, which closed up 0.31 percent on a rebound after plunging almost eight percent in just four days last week amid regulatory moves to restrict record capital flows. - AFP/ir
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