(Adds markets, quotes, updates prices)
By Louise Heavens
SINGAPORE, Jan 22 (Reuters) - Stocks tumbled across Asia as
panicky investors feared a U.S. recession could derail global
economic growth, and a sharp drop in U.S. stock index futures
pointed to heavy selling in New York later on Tuesday.
Share markets from Tokyo to Sydney slumped 5-7 percent,
with the Australian market suffering its worst-ever one-day
fall, and India's benchmark Sensex <> crashed more than
11 percent, triggering a trading halt.
Industrial metals such as zinc and copper <MCU3> 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 Two 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 <SPc1> <DJc1> 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 <JPY=> 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 <7203.T>, Sony Corp <6758.T> and
Canon Inc <75751.T>.
MSCI's All Country World Index <.MIWD00000PUS> 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 <.MSCIEF>, which on Monday had
its worst daily fall since August, shed 3.5 percent.
Japanese treasuries <TYv1> surged as alarmed investors
sought the relative safety of government debt. March 10-year
futures <2JGBv1> 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
<ITAHY12Z8A=ITX>, 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
U.S. 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 U.S. subprime
mortgage crisis will drag global financial markets lower.
South Korea's technology stocks, heavily dependent on the
U.S. export market, were mauled, pushing the main stock index
<> down more than 6 percent 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 U.S. recession fears dragging bellwether bank
HSBC Holdings <0005.HK> to lows not seen since October 2003.
Hong Kong-listed shares in mainland companies <.HSCE> sank
11 percent. The Hang Seng Index <> is down about 30 percent
since a recent peak in late October and off 19 percent this
year.
The president of China's sixth-largest bank, China
Merchants Bank Co <600036.SS><3698.HK>, told Reuters on Monday
that earnings at Chinese banks will probably be hit this year
by the snowballing U.S. 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 <BHP.AX> fell 4.9 percent and Rio Tinto
<RIO.AX> tumbled 11 percent.
Shanghai copper and zinc futures fell by their 4 percent
daily limits.
Oil deepened losses as global stock markets tanked.
London's Brent crude <LCOc1> 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."
(Additional reporting by Rita Chang and Rafael Nam in Hong
Kong and David Dolan in Tokyo; Editing by Ian Geoghegan)
