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SYDNEY: Asian stock markets fell sharply on Monday on fresh fears over the state of the global financial system amidst concern over the fate of Wall Street giant Lehman Brothers, dealers said.
Australian shares were down 2.21 per cent at noon, Singapore stocks dropped 2.26 per cent in morning trading and in Taiwan shares fell 4.2 per cent, the lowest since November 2005.
In markets that were trading, financial sectors suffered most as investment bank Lehman Brothers, which has been badly hit by the US subprime real estate meltdown, appeared on the verge of liquidation after no buyer emerged to rescue it.
The Federal Reserve and major global banks opened up fresh credit as markets braced for its collapse, with many fearing a domino effect that would ravage the rest of the global financial system.
In related developments, news reports said Merrill Lynch, another storied Wall Street company, had struck a deal to sell itself to Bank of America, and American International Group, one of the world's biggest insurers, was seeking emergency credit from the Federal Reserve.
Australia's benchmark S&P/ASX200 dropped 108.4 points to 4795.4 at noon (0200 GMT), while the broader All Ordinaries fell 96.4 points to 4860.7.
"(The banks) are the key driver," said Austock Securities senior client adviser Michael Heffernan.
"Other than that our resources stocks are doing alright, but the banks are getting belted at the moment."
In Singapore the main Straits Times Index fell 58.21 points to 2,512.46 from Friday's close of 2,570.67.
Investors are increasingly worried that the region will be hit by the fresh fallout from the turbulence in the US financial markets, dealers said.
In Taiwan, local financial shares led the fall amid fears that the sector will be forced to assign additional provisions for investment losses if Lehman Brothers slides into bankruptcy.
The TAIEX had plummetted 267.02 points to 6,043.66 by midday.
"The negative Lehman Brothers news triggered large selling pressure upon the market opening. Investors here are afraid that Wall Street will tumble Monday," Taiwan International Securities analyst Arch Shih said.
Financial markets in Japan, China, Hong Kong and South Korea are closed Monday for a public holiday, and will resume on Tuesday.
- AFPyb
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