Asian stocks tumbled for the fourth week, posting their biggest drop in 17 years as a deepening US housing slump and spreading credit crunch cooled investor demand for equities. BHP Billiton Ltd and Toyota Motor Corp fell.
Mitsubishi UFJ Financial Group Inc paced a slide among lenders after reporting losses related to US subprime loans. Rams Home Loans Group Ltd plunged after the Australian company failed to refinance short-term US loans.
"It's not clear how long the subprime turmoil will continue so financial shares will be sold until this problem is solved completely," said Yasuhiko Hirakawa, who helps manage the equivalent of US$80 billion at DLIBJ Asset Management Co in Tokyo.
The Morgan Stanley Capital International Asia-Pacific Index lost 8 percent to 137.14, erasing this year's gain. All of the MSCI's 10 industry groups fell, with the measure of materials producers that includes BHP posting the largest decline.
Indonesia's Jakarta Composite Index posted the biggest drop among the region's stocks benchmarks, losing 14 percent.
Heavy selling in Tokyo quickly spread across the entire region with major markets down more than 5 percent as investors scrambled to exit the market fearing further heavy losses.
Jakarta was closed for a public holiday.
Taiwanese share prices closed at three-month lows, down 1.35 percent, as a continued sell-off on regional bourses led an early technical bounce on the local market to fizzle out.
Dealers said financial stocks led a rebound early in the session as the sector was among the hardest hit in the recent slump caused by worries over the US subprime-mortgage situation.
But tumbles in regional markets aggravated margin calls locally, leading to a downswing by midmorning
The approach of Typhoon Sepat also caused investors to take a cautious stance ahead of the weekend, after warnings of strong winds and torrential rains.
The weighted index closed down 111.08 points at 8,090.29. Turnover was at NT$178.43 billion (US$5.39 billion).
Japanese share prices plummeted more than 5 percent, suffering the biggest one-day point drop since April 2000 as US housing worries battered Asian markets.
Dealers said investors dumped stocks as they rushed to safe havens such as bonds to escape the escalating fallout from problems in credit markets, with even traditional market favorites such as Toyota Motor slumping over seven percent.
The NIKKEI-225 index tumbled 874.81 points or 5.42 percent to end at 15,273.68. Turnover rose to 2.94 billion shares from 2.68 billion shares on Thursday.
"Market sentiment is a disaster," said Ryuta Otsuka, head of research at Toyo Securities.
The dramatic drop was "as bad as when the dot-com bubble burst" in 2000, he said.
Share prices closed 1.4 percent lower, reversing earlier sharp losses of 6 percent, as bargain hunting helped the market to narrow its losses.
Dealers said sharp falls on Japanese and South Korean bourses and continued volatility on Wall Street drove the index below 20,000 points in the afternoon before late buying helped it regain the key psychological level.
The Hang Seng Index closed down 285.26 points at 20,387.13.
Chinese share prices closed 2.28 percent lower amid continued concerns over sharp falls in the regional markets triggered by the US credit crunch. The Shanghai Composite Index closed down 108.87 points to 4,656.57.