Asian Markets Tumble on Global Growth Fears

Asian markets fell Wednesday, with regional shares outside of Japan hitting a 17-month low, on the growing risk of a sharp global economic slowdown. Japan and Australia both fell 2 percent.

The U.S. dollar hovered near six-month highs against a basket of major currencies, with investors watching oil and stock markets for direction.

Data showing Japan's economy contracted in the second quarteradded to a sense of unease about growth prospects and reinforced concerns that the world's second-largest economy may have slipped into a recession.

Also, credit woes showed no signs of ending after a year, with JPMorgan Chase , the No.3 U.S. bank, saying on Tuesday it chalked up $1.5 billion in losses so far this quarter on mortgage-related assets.

Falling crude oil prices could not shake the market's gloom, which was compounded by a warning from Dallas Federal Reserve Bank president Richard Fisher that the U.S. economy was in for a prolonged period of lower growth. Oil is currently trading at $113 a barrel in the Asian session.

Japan's Nikkei 225 Average finished 2.1 percent lower, with a wide range of shares including Canon hurt by growing worries about both the domestic and
global economies. Banks slid in the wake of falls by their U.S. peers, with Mitsubishi UFJ Financial Group shedding more than 4 percent after saying it would bid $3 billion to buy the remaining 35 percent of California's UnionBanCal that it does not already own.

South Korea's KOSPI closed almost 1 percent lower, led down by steelmakers and shipbuilders on a darkening outlook, while earnings fears sent airlines lower ahead of Korean Air's results Thursday.

Australian shares fell 2 percent on concerns about slowing growth in major economies such as the U.S. and Japan, while disappointing earnings outlooks also weighed on the market. Financials were the biggest losers with Babcock & Brown plunging over 6 percent. Telstra also lost ground after its second-half profit missed expectations.

Hong Kong shares extended their downtrend into a fourth consecutive session, giving up 1.6 percent, led by Chinese banks after the nation's top lender ICBC was downgraded by Credit Suisse analysts on Wednesday. But some commodity-linked firms rose despite retreating resources prices as analysts called for firmer valuations after a month-long rout for the stocks. Chinese banks tanked, weighed by worries over an economic slowdown and renewed inflation fears. The nation's second largest lender, China Construction Bank, led losses on the main index.

Singapore's Straits Times Index was down 0.2 percent as blue chips fell across the board. But shares of palm oil-maker First Resources surged after it said second quarter net profit more than doubled.

China's Shanghai Composite Index closed 0.4 percent after touching a fresh 19-month low in very thin trade as investors continued to fret about the possibility that economic growth would slow further. Banking stocks fell on concern that a slowing economy would create more bad loans. Industrial & Commercial Bank of China, the biggest lender, dropped 3 percent.