Asian stock markets slump amid financial fears

Asian stock markets slump as financial fears send banks lower; Hong Kong index off 3 pct.

Asian stock markets fell Tuesday, with benchmarks in Hong Kong and South Korea off about 3 percent, as renewed financial fears sent banks across the region tumbling.

Every major market retreated, with the previous day's news that Japan's recession deepened amid the global economic downturn still weighing on investors. Crude oil prices fell below $37 a barrel, though the dollar strengthened against the yen.

Banks and insurers were in the spotlight amid concerns there was more pain ahead for the global financial industry.

In Britain overnight, fears mounted that Lloyds Banking Group might be nationalized after the firm Friday reported larger-than-expected losses at recently acquired Halifax-Bank of Scotland. Meanwhile, the cost of protecting against defaults on bank debt in Japan and elsewhere rose, analysts said.

"The news flow just hasn't stopped being negative about financials," said John Mar, co-head of sales trading at Daiwa Securities SMBC Co. in Hong Kong. "Itdoesn't seem like we've hit bottom yet."

Japan's Nikkei 225 stock average sank 1.5 percent to 7,634.43, Hong Kong's Hang Seng dropped 3 percent to 13,047.60, and South Korea's Kospi lost 2.8 percent to 1,142.12.

In China, where shares have surged in recent weeks on hopes its economy can sustain strong growth, the Shanghai benchmark dropped 0.5 percent to 2,376.97. Markets in Australia and Singapore also declined.

Among financials, leading Japanese bank Mitsubishi UFJ Financial Group Inc. sank 4.3 percent, while China Construction Bank shed 4.5 percent in Hong Kong.

South Korea's Woori Finance Holdings, which sparked investor worries last week after its banking unit decided against repaying some of its debt early, fell 4.5 percent.

Wall Street, closed Monday for a public holiday, was to reopen Tuesday. In Europe, Britain's FTSE 100 closed down 1.3 percent at 4,134.75, Germany's DAX sank 1.1 percent to 4,366.64, and France's CAC 40 dropped 1.2 percent to 2,962.22.

Oil prices dipped, with light, sweet crude for March delivery falling 83 cents to $36.68 by midday in Singapore on the New York Mercantile Exchange after settling at $37.51 on Friday.

The contract rose 11 cents to $37.62 overnight in European trading on the New York Mercantile Exchange, though volumes were subdued because U.S. markets were closed.

The dollar advanced to 92.32 yen compared to 91.68 yen. The euro traded at $1.2667 from $1.2539.

Yahoo! Finance.com