Asian stocks fell to their lowest in months yesterday -- and European stocks followed in early trade -- battered by persistent jitters over US housing loan problems and their possible damage to global financial markets.
The benchmark Nikkei 225 index closed down nearly 2 percent on the Tokyo Stock Exchange after falling below the key 16,000-point mark the first time since last November.
South Korea's main benchmark fell 6.9 percent to its lowest finish since May, and Hong Kong's blue-chip Hang Seng Index closed down 3.3 percent.
Meanwhile, European stock indices dropped in yesterday morning trade, with Britain's FTSE, France's CAC-40 down 2.3 percent and Germany's DAX down about 2 percent.
Repercussions in Asian markets were bigger compared with the loss of 1.3 percent overnight in the US -- where the loan problems erupted -- with at least three Asian markets losing more than 6 percent on the day.
That's because of uncertainty over the size of impact on corporate earnings and the regional economy, said Shinichi Ichikawa, chief strategist at Credit Suisse.
He said the weakness of the US dollar and the euro also fueled the concerns.
"The issue of the subprime loans is not just the problem of that sector, but it also affects many related financial products, [and] the size of a possible damage or other details are not clear, and that's why investors are feeling uneasy," Ichikawa said.
"All of Asia and other European markets are watching the US market," said James Soh, a strategist at Korea Investment & Securities Co. in Seoul.
Global investors were focused in particular on the US Federal Reserve, he said.
The Federal Reserve added more cash to the US banking system on Wednesday, and other central banks have been pouring cash into their banking systems as well since the end of last week. But the injections has so far failed to quash investors' jitters and halt the global slide.
Some investors have been calling for the US central bank to free up more cash by making an interest rate cut at its Sept. 18 meeting, but the Fed has given no indication it is considering a hike.
The Bank of Japan injected ¥400 billion (US$3.4 billion) into money markets yesterday morning, the third time since last Friday it has acted in a bid to curb rises in a key overnight interest rate.
Australia's central bank also pumped a larger than usual daily amount of money into the banking system yesterday. Reserve Bank of Australia market data showed it injected A$3.04 billion (US$2.48 billion) into the system, 63 percent above the daily average for the year to date of about A$1.86 billion.
Later yesterday, New Zealand's central bank said it was closely monitoring market movements and was ready to inject liquidity if needed.
Following the recent disruptions in global credit markets, the Reserve Bank has been closely monitoring the impact on the domestic markets and liquidity conditions, Acting Governor Grant Spencer said in a statement.
South Korean Vice Finance Minister Kim Seok-dong echoed the concern, vowing to swiftly deal with the impact of global market fluctuations .
"If there is a credit crunch in the domestic financial market due to a ripple effect from international financial markets, the government will deal with the matter by immediately injecting liquidity," Kim said.
New Zealand's benchmark NZX-50 fell 1.2 percent yesterday to close at 3,957.94, its fifth loss in five days.
Australia's benchmark S&P/ASX 200 index closed down 1.3 percent at 5,711.5.
Stocks also plunged elsewhere in Asia.
The Philippine benchmark index closed down 6 percent after crashing through the 3,000 mark. Indonesia's standard stock index was down more than 6 percent.
China's main index in Shanghai fell 2.1 percent. Singapore's Straits Times Index was down 4.3 percent, and India's Sensex 30 stock benchmark index lost 4.3 percent to close at 14,358.21 -- the sharpest decline since May 18 last year. Malaysia's Kuala Lumpur composite index slid 3.5 percent to 1,207.61.