Stocks Dive on Recession Fears, Nikkei Sinks 9.4%

Fear ruled the day in Asian markets as panic selling sent benchmark indices to multi-year lows on Wednesday.

Markets from Tokyo to Jakarta tumbled sharply, dragged lower by another gloomy session on Wall Street that saw the Dow Jones industrial average notch its biggest five-day points fall ever.

Japan led the dive, with the Nikkei 225 plunging 9.4 percent to its biggest one-day drop since the 1987 stock market crash. Several factors fuelled the selloff -- mounting fears of a global recession, expectations of a slide in profits at Toyota Motor and a firmer yen. Japanese steelmakers such as Nippon Steel slumped 11 percent amid concerns a global downturn will stifle steel demand.Exporters were dealt a further blow by a firmer yen, with Elpida Memory sinking 12 percent.

That pessimism was reflected in the way investors dumped shares of Toyota Motor. The world's biggest automaker plunged 11 percent, after the Nikkei business daily reported that the automaker was likely to post a 40 percent slide in annual profit, missing its profit estimates on weak sales in the U.S. and slower growth in China.

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In Seoul, the KOSPI closed 5.8 percent lower, hammered by worries the credit crisis will drag the economy into recession. Tech exporters such as Hynix Semiconductor plunged more than 5 percent despite a weaker won. The country's refineries and banks were battered, with the Industrial Bank of Korea tanking over 10 percent amid a gloomy global economic outlook.   
Shinhan Financial fell 8.25 percent to close at a 52 week low, and SK Energy lost 12.71 percent.

The picture was similar in Australia. The benchmark S&P/ASX200 tumbled 5 percent on selling across the board. The country's big banks such as St George and NAB sank more than 6 percent. Big miners such as BHP Billiton, the market's heaviest-weighted stock, lost favor as investors feared the global slowdown would crimp demand for metals and other commodities. But Commonwealth Bank of Australia was on a trading halt due to a share sale to help fund its A$2.1 billion takeover of BankWest, the Australian unit of British bank HBOS.

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Hong Kong shares plummeted 8.2 percent to fall below the 16,000 point-level for the first time in more than 27 months. Investors feared for the worst as broad-stroke policy measures failed to end the global credit crisis. Property leaders such as Cheung Kong lost 5.6 percent while energy and other resource stocks were battered by concern over slowing demand. Financials such as China Construction Bank sank 10 percent.

Singapore's Straits Times Index tumbled 6.6 percent, with big caps such as Singapore Exchange diving more than 8 percent amid a lack of confidence among investors.

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