Asian markets declined 1 percent on average Thursday, weighed down by banking shares after Lehman Brothers failed to to restore investor confidence with plans to sell a majority stake in its asset management unit and spin off commercial real estate.
Financial stocks extended losses after Lehman posted a record quarterly loss of $3.9 billion. The dismal results from Lehman, which is trying to shed assets to stay alive, sent a message to investors that the year-long global credit crisis will likely claim more victims before ending.
Japan's Mitsubishi UFJ Financial Group and Mizuho Financial Group, Australia's Macquarie Group and Babcock & Brown, and South Korea's Kookmin Bank and Shinhan Financial all closed sharply lower.
The euro briefly fell below $1.3950 to the lowest since September 2007, with investors focused for now on rapidly slowing economic growth outside of the U.S., while crude oil futures moved above $103 a barrel after hitting a five-month low on Wednesday on the dollar's rally.
Japan's Nikkei 225 Average fell 2 percent to a nearly six-month closing low, with banks taking a beating. Blue-chip exporters such as Canon dropped amid
uncertainty about the health of the global economy, while sharp slides in other Asian equity markets during the afternoon added impetus to the Nikkei's decline.
South Korea's KOSPI shed 1.5 percent led by financials, with heavy program selling on options and futures expiries adding to volatility.
Australian shares finished 1.9 percent as declines in banking shares, outweighed gains in some energy firms.
Hong Kong shares dropped 3.1 percent to plumb a thirteen-month low, with jittery investors diluting their holdings on global financial worries and resources stocks pressured by a stronger U.S. dollar. Chinese telecom stocks fell sharply on deepening concerns over the fallout from widespread industry restructuring and regulatory uncertainties. China Mobile, the world's largest wireless carrier, dropped over 5 percent.
Singapore's Straits Times Index fell 2.5 percent, led by financials after Merrill Lynch
downgraded DBS Group, OCBC and United Overseas Bank, citing weaker profits in 2009.
China's Shanghai Composite Index was down 3.3 percent, led by blue chips, as gloom over the economic outlook and large supplies of fresh equity persisted. Industrial & Commercial Bank of China and PetroChina were both lower.