Asian stocks fell for a third week as a widening credit crunch, sparked by losses on US subprime mortgages, fueled concern that global economic growth will cool.
Aozora Bank Ltd and DBS Group Holdings Ltd paced declines among lenders on concern rising home-loan defaults in the US will erode the value of their investments. Honda Motor Co and BHP Billiton dropped as investors bet demand for consumer goods and raw materials will ease.
"This credit crunch will continue to weigh on stocks for a while," said Yoshihisa Okamoto, a Tokyo-based fund manager at Mizuho Asset Management Co with US$26 billion in assets.
"We just don't see an end to it and it's prompting everyone to sell," Okamoto said.
The Morgan Stanley Capital International Asia-Pacific Index slid 2.4 percent to 149.13, after losing 4.9 percent in the previous two weeks.
The benchmark closed at its lowest in more than two months, with all 10 industry groups sliding.
Taiwanese share prices closed sharply lower, down 2.74 percent after a sell-off on Wall Street and European markets on growing concerns about the fallout from problems in the US home loan sector.
Dealers said the injection of liquidity by US, Japanese and European central banks points to a genuine threat of a broader credit crunch to follow.
The weighted index lost 251.29 points at 8,931.31 on turnover of NT$166.49 billion (US$5.06 billion).
Taipei joined its neighbors in the regional downturn in the wake of subprime problems across the US and Europe, Jih Sun Securities Investment Consulting Co (日盛投顧) deputy manager Wilson Lien said.
Volatility is also set to remain a feature of domestic and overseas financial markets in the near term as credit-market jitters continue to weigh on sentiment, he said.
The worst may still be ahead if more high-profile companies in the financial services industry such as BNP Paribas are also affected by the ongoing subprime problems, he added.
Japanese share prices closed down 2.37 percent at a near five-month low, mirroring sharp losses on other global bourses amid growing concern about problems in credit markets.
Dealers said news that the Bank of Japan had pumped cash into the financial system to try to ease a liquidity squeeze, following similar moves by the US and Eurozone central banks, had only added to the nervousness.
The NIKKEI-225 index dropped 406.51 points to 16,764.09.
Share prices closed sharply lower, down 2.88 percent, as fears of a global credit crisis sparked by US subprime mortgage problems dominated trading throughout the day.
Trade was closed earlier than normal after a typhoon warning.
The Hang Seng index closed down 646.65 points at 21,792.71.
Chinese share prices edged 0.10 percent lower as investors locked in profits amid jitters over losses on global markets and ahead of the release of key domestic inflation data.
Dealers said the decline was led by property developers, who had contributed to drive five straight record-breaking days and a gain of more than 10 percent over the past six trading sessions.
The Shanghai Composite Index ended down 4.73 points at 4749.37.
South Korean share prices closed 4.2 percent lower, with the KOSPI index hitting its worst level in more than a month amid fears of an emerging global credit crunch.
The KOSPI index ended down 80.19 points at 1,828.49.