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HONG KONG - Asian stocks slumped Tuesday following the collapse of US investment bank Lehman Brothers, while governments tried to make reassurances that their economies were sound.
Japanese shares dropped almost five per cent to close at a three-year low, while Hong Kong was off 5.4 per cent and Seoul lost more than six per cent.
Officials in Australia, Japan and elsewhere pledged to try to keep markets calm, with Tokyo injecting 2.5 trillion yen (24 billion US dollars) into the markets.
But investors were faced with an array of bad news that went well beyond the fall of Lehman.
Ratings agencies downgraded American International Group (AIG) -- a move that could spell the end for the insurance giant and Bank of America shares dropped 21 per cent after it bought distressed Lehman rival Merrill Lynch.
In Australia, where a surprise late rally kept the market's losses to 1.4 per cent, Prime Minister Kevin Rudd met treasury officials and the head of the Reserve Bank of Australia.
Markets found no solace after news that two Japanese banks were among Lehman's biggest lenders, one of which, Aozora, lost around 20 per cent of its share value.
In South Korea, shares closed 6.1 per cent lower while the currency, the won, fell 4.3 per cent against the dollar, its biggest daily drop in a decade.
And financials plummeted almost seven per cent in Taiwan amid concerns of an estimated exposure of 80 billion Taiwan dollars (2.48 billion US dollars) to Lehman for local investors. Taipei closed 4.89 per cent down.
Chinese share prices closed 4.47 per cent lower, a day after the government cut interest rates in a bid to boost economic growth.
Singapore bounced back from a fall of 2.31 per cent in the opening to end the day just 1.01 per cent off.
Elsewhere, Philippine share prices closed down 4.5 per cent, the sharpest one-day fall in Manila since January, while in Wellington the market shed 2.87 per cent. Malaysian stocks closed 1.9 per cent down and the Thai market ended 2.78 per cent lower.
However, Jakarta's bourse finished the day one per cent higher after opening almost seven per cent down.
- AFP/ir
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