Asian markets closed deep in the red Thursday as investors dumped financial shares on credit fears. Japan finished 2 percent lower and South Korea shed 3.1 percent.
The latest bout of credit fears was sparked by a probe of the U.S. home loan industry by New York's attorney general and after Washington Mutual, the top U.S. savings and loans firm, warned the housing downturn would extend well into next year.
Financial stocks were worst hit with Citigroup's Tokyo listing down over 5 percent. Investors were also selling out of Japan's Marubeni Corp., South Korea's Shinhan Financial, China's Bank of Communications and Australia's ANZ Banking Group.
Exporters were also hammered after the dollar tumbled to a record low against the euro and a basket of major currencies overnight. A weak dollar tends to hurt the value of overseas sales for these exporters. Japan's Sony, Honda Motor, South Korea's Hyundai Motor and Samsung Electronics all lost more than 2 percent. Even Toyota, which posted a 2.7 percent rise in quarterly operating profit and nudged up its full-year forecasts, was not spared, falling 3 percent
Hong Kong stocks sank nearly 4 percent after losses on Wall Street prompted investors to dump shares across the board, but Hong Kong and China Gas jumped after Henderson Land Development said it would sweeten its offer for the company.
The Nikkei 225 Average fell 2 percent to a two-month closing low after spreading credit fears sent Wall Street tumbling and exporters such as Honda Motor were battered down by the higher yen. Widespread selling also hit financial firms, which were
spooked by falls in U.S. financial services companies due to fears about the fallout of the subprime mortgage crisis.
South Korea's KOSPI fell 3.1 percent to a two-week closing low, posting their biggest daily percentage fall in nearly three weeks, as fears over global credit markets hit banks such as Kookmin Bank and exporters. Chipmakers slumped after Citigroup cut its target price on Hynix Semiconductor, saying the world's No. 2 maker of memory chips was headed for its first quarterly operating loss since 2003 due to worse-than-expected pricing for memory chips
Australian shares fell 2.55 percent to their lowest level in six weeks, as growing worries about global credit markets dented financial stocks such as Macquarie Group. The S&P/ASX 200 Index fell as much as 3.05 percent during the session, its biggest one-day percentage fall since Aug. 10. However, global miner Rio Tinto bucked the downtrend, gaining 1 percent as fresh talk surfaced that BHP Billiton was lining up a bid. BHP itself was weighed down by a retreat in oil and base metals prices, which dragged broadly on the resources sector.
Hong Kong stocks tumbled over 3 percent after sharp losses on Wall Street prompted a broad selloff, but blue-chip Hong Kong & China Gas set a life high after Henderson Land said it would sweeten its offer for a stake in the company. Henderson Investment, which would sell the stake to Henderson Land, hit a record high.
China's Shanghai Composite Index plunged nearly 3 percent as weakness in Hong Kong and other markets unsettled investors who were already jittery about monetary policy and a growing supply of new shares from public offers.
Markets in Singapore and Malaysia are closed for a holiday. They will reopen Friday.