Asian Markets Slide, Japan Sinks Below 11,000

Asian markets fell sharply Friday while the yen rose to a two-year high against the euro on fears the $700 billion financial rescue bill still needing final U.S. government approval may not be enough to keep the global economy from falling into recession.

The flow of credit remained practically frozen in money markets, leading to a scramble for U.S. dollar funding that has the currency on track for its largest weekly gain in 16 years against a basket of major currencies.

The euro remained under pressure after dropping to a 13-month low against the dollar on Thursday on indications the European Central Bank is leaning toward cutting interest rates after recent bank failures threatened the euro zone economy. The dollar slipped 0.3 percent at 105 yen .

Crude oil futures dropped over 4 percent in New York and is trading below $94 a barrel in the Asian session. Pre-Markets

The Nikkei 225 Average fell 1.9 percent to a three-year closing low for its worst weekly drop in more than a year as growing fears about the global economy hit high-tech firms, autos and exporters. The index sank below the key 11,000 level Toyota Motor fell to a three-year low and Nissan Motor dropped to its lowest level in nearly seven years after major car companies reported a 26 percent drop in overall U.S. sales for September as the crisis on Wall Street rocked consumer confidence.

Australian shares closed 1.4 percent lower, led down by resource firms and banks, as investors
eye the passage of the bailout bill. Resource counters Rio Tinto and BHP Billiton, down 2.5 and 4 percent respectively. Beleaguered Babcock & Brown fell 8 percent.

Hong Kong shares fell 2.9 percent as lower prices hammered energy stocks while local lender Hang Seng Bank extended its slide as investors fretted over its exposure to failed U.S. lender Washington Mutual. But China Resources Logic dodged the downdraft to soar 29.5 percent after it told Reuters it would buy 22 urban gas projects from its parent and seek to invest in an industry rival after it acquires China Resources Gas this month.

Singapore's Straits Times Index shed 2.8 percent as investors feared the U.S. bailout package, if approved, may not be enough to keep the U.S. economy from going into a recession. Top lender DBS Bank was down 0.8 percent, while the world's top offshore rig builder Keppel Corp dropped 8.8 percent.

South Korean and Chinese markets are closed for a holiday. They will reopen on Monday.