Asian markets fell sharply Thursday as troubles at U.S. investment bank Lehman Brothers fanned fears of more credit-market losses and drove down financial company shares across the region.
Japan's key stock index sank to its lowest in nearly six months as investors dumped banks and brokerages. The Nikkei 225 closed down 1.98 percent. to 12,102.50 _ its lowest closing level since March 18.
In Hong Kong, the Hang Seng Index shed 3.1 percent to 19,388.72, its worst finish since March 20 last year. Heavyweight China Mobile, the world's largest mobile phone company by subscribers, hit a new intraday low for the year as it tanked 5.3 percent.
In China, the Shanghai Composite Index fell 3.3 percent on heavy selling in financials and property stocks. Benchmarks in Taiwan and Singapore also lost more than 3 percent.
Many investors were jittery after Lehman Brothers Holdings Inc. reported an almost $4 billion third-quarter loss and detailed a turnaround plan. The No. 4 Wall Street bank said it would sell a majority stake in its prized investment management business, spin off a troubled mortgage unit and slash its dividend.
The news helped send all major Asian benchmarks lower, wiping out gains from a regional rally on Monday sparked by the U.S. government's move to seize control of mortgage lenders Fannie Mae and Freddie Mac.
"The major reason for today is Lehman," said Castor Pang, an equities analyst at Sun Hung Kai Financial in Hong Kong. "If Lehman's problems could spread out and affect other financials, every sector and every region could ultimately get burned."
Volatile markets, pessimism about the financial sector and prospects for a sustained global slowdown are leading investors to move funds from stocks to safer waters such as cash or bonds, said Nobuhiko Kuramochi, general manager of the equity information department at Shinko Securities in Tokyo.
"Right now, there's little incentive for investors to move back into stocks," he said.
Elsewhere, India's Sensex lost 2.3 percent and Australia's S&P/ASX 200 retreated 1.9 percent.
Taiwan's benchmark swooned 3.2 percent even though the government introduced a stimulus package to boost the struggling economy.
Selling spread across most sectors, with banks, insurance companies and securities firms among the day's biggest losers.
In Japan, Mitsubishi UFJ Financial Group, Inc., the world's largest bank by assets, shed 5.07 and top Japanese brokerage Nomura Holdings, Inc. tumbled 5.94 percent.
Leading insurance firm China Life sank 8 percent in Shanghai, while No. 1 China lender ICBC lost 3.4 percent in Hong Kong. Australia's fourth-largest bank, Australia & New Zealand Banking Group Ltd., dropped 4.3 percent.
The declines came even as oil hovered near a five-month low and commodities prices continued to soften. Both market boosters in the past, they were now seen as signs by many investors of slowing global growth.
"Whatever good news you can think of _ nationalization of mortage debts or lower oil prices _ doesn't seem to help the markets," said Henry Chan, team leader at Baring Asset Management in Hong Kong, who helps oversee about $11 billion in Asian equities.
"It's a confirmation that we're in the stage of a bear market," he said.
Light, sweet crude for October delivery fell 10 cents to $102.48 a barrel in Asia trade. The contract dropped overnight to $102.58, the lowest close since April 1.
Economic fears also restrained investors across the region.
In Japan, shares of major machinery makers wilted after the government reported that a key barometer of corporate capital spending in Japan fell for the second straight month in July. Mitsubishi Heavy Industries slumped 5.50 percent.
In currencies, the dollar fell to 107.15 yen from 107.38 yen late Wednesday. The euro stood at $1.3940 from $1.3962.
__
AP writers Tomoko A. Hosaka in Tokyo and Elaine Kurtenbach in Shanghai contributed to this report.
