Asian stocks plunge as financial crisis spreads to Europe

October 6th, 2008 - 3:58 pm ICT by IANS  

Tokyo, Oct 6 (DPA) Asian stocks nosedived throughout the region Monday as investors feared the US bail-out would fall far short of resolving the financial crisis that has also spread to Europe.Stocks in Tokyo plunged to their lowest levels in five years on worries about the deepening global crisis despite the US Congress’ approval of a $700-billion Wall Street bail-out.

The benchmark Nikkei 225 Stock Average fell by 4.25 percent, while the broader Topix index of all first-section issues fell below 1,000 points for the first time since December 2003, 4.67 percent.

The Bank of Japan also pumped one trillion yen ($9.6 billion) into the money markets. It was the 14th-consecutive business day it had made such an injection to ease disruptions in financial markets and free up credit.

The total amount of liquidity now infused into the economy by the Bank of Japan comes to 25.3 trillion yen since the US investment bank Lehman Brothers Holdings Inc filed for bankruptcy Sep 15.

Taiwan stocks fell more than 3 percent by mid-morning Monday as investors worried about the global economic slump.

“Major Asian shares dived today because, despite the passing of the $700-billion rescue package in the US Congress, many Americans don’t think the package can solve all of America’s economic problems,” said Chiu Hsin-lin, executive vice president of the Industrial Bank of Taiwan Securities.

“The other factor is that the economic figures released by the US last week were discouraging,” he added.

The US Labour Department reported last week that 159,000 jobs were lost in September, bringing the total for the year to nearly 800,000.

Shares fell sharply on the Seoul Stock Exchange, sending the benchmark Kospi index down 60.9 points, or 4.3 percent, to close at 1,358.75.

Hong Kong share prices fell by more than 3 percent Monday morning as investors across the region joined in a sell-off over fears that financial turmoil in Europe was spreading.

All 43 blue-chip companies closed down lower in Hong Kong with the heaviest losses in insurance companies and banks exposed to troubled US and European institutions.

In China, the benchmark Shanghai Composite Index dropped 120.05 points, or 5.23 percent, to close at 2,173.74 points. The Shenzhen Component Index fell 341.95 points, or 4.52 percent, to close at 7,217.32 points.

In Australia, the ASX 200 gave up 155 points, or 3.3 percent, to 4,540. The rout took the index back to where it was in December 2005.

Shares fell across the board, with mining stocks hit hardest because the financial crisis is slowing economies around the world and crimping demand for raw materials

Philippine shares dropped 2.59 percent as investors took a wait-and-see attitude on the bail-out package approved by the US Congress over the weekend.

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