Asian markets fell sharply yesterday after Wall Street declined at the end of last week on renewed concerns about US mortgage problems. European markets, however, were mixed in early morning trade.
"Basically, the subprime loan issue still drags on, and there is no prospect of what can end the problem," said Shinichi Ichikawa, chief strategist at Credit Suisse, of the falls in Asian markets.
Major banks warned last week of further losses in their debt portfolios, raising investor concerns that the credit market slump isn't abating.
Taiwan's TAIEX closed down 3.35 percent, Japan's benchmark Nikkei 225 index dropped 2.5 percent, and Hong Kong's Hang Seng fell 3.9 percent. In South Korea, the Korea Composite Stock Price Index, or Kospi, fell 3.4 percent.
Both the Hang Seng and the Kospi fell more than 4 percent during intraday trade, and the Nikkei dipped below 15,000 points for the first time since July last year.
"As for the US economy, the risk of recession is increasing toward the next year amid the lingering subprime loan problems," which, combined with higher oil prices, prompted players to sell the dollar, Ichikawa said.
Japanese traders sold exporter issues on the strengthening yen, which is at its highest levels against the dollar in 18 months. A stronger yen makes exporters' goods less competitive overseas and cuts into their foreign earnings.
In Hong Kong, HSBC shed 2.8 percent on subprime exposure woes.
Chinese financial shares were also lower after China's central bank raised the reserve requirement for banks by 50 basis points to 13.5 percent at the weekend in another of its money-tightening measures.
Meanwhile, European markets opened mixed in early trade yesterday, with Germany's DAX down 0.2 percent, France's CAC 40 down 0.1 percent and Britain's FTSE 100 up 0.7 percent.
In other Asian markets, shares tumbled as well. The Shanghai composite index lost 4.7 percent amid unconfirmed rumors that the China Securities Regulatory Commission recently ordered funds to hold off on aggressive buying.
The benchmark indices also lost ground in Australia, the Philippines and Thailand.