Asian and Pacific stocks caught US and European jitters over losses in the US home-loan market as most of the benchmark indices in the region fell Friday by more than 2 per cent, DPA reported. Asian exporters like Toyota Motor Corp and Samsung Electronics Co were among the hardest-hit companies on concerns over losses linked to subprime, or higher risk, mortgages in the United States, a key export market. A day earlier, US and European stocks also tumbled on worries that those mortgage losses would lead to tighter credit and slower economic growth around the world. Banks - such as Australia's Macquarie Bank Ltd, Japan's Mitsubishi UFJ Financial Group Inc and Singapore's DBS Group Holdings Ltd - also led declines after France's BNP Paribas SA froze withdrawals from mutual funds that own subprime loans. The index seeing the region's largest decline was South Korea's Kospi, which dropped 4.2 per cent to 1,828.49, its biggest drop in three years. In Tokyo, the key Nikkei 225 Stock Average plunged 2.37 per cent to close at 16,764.09 after two days of gains. The broader Topix index of all first-section issues also tumbled 2.96 per cent to 1,633.93. The Bank of Japan injected 1 trillion yen (8.5 billion dollars) into the money market Friday after the European and US central banks made similar moves to bolster liquidity and calm subprime-mortgage turmoil in the global financial markets. Japanese officials also sought to calm investors. "The overall global economy is sound, and the Japanese economy also keeps growing in a stable manner," Japanese Finance Minister Koji Omi said Friday, adding that the government would continue to closely monitor developments in the global market. In Australia, stocks posted their biggest fall since the September 11, 2001, terrorist attacks in the United States as the All Ordinaries index shed 222 points, or 3.7 per cent, to close at 5,924 Mining giants BHP-Billiton and Rio Tinto gave up 5 per cent and 4 per cent, respectively, as shares of Australia's biggest investment bank, Macquarie, plunged 7 per cent. "Investors are clearly spooked by the extent of losses in the US and Europe overnight, and there were no real positions of safety with losses across the board," said MFS Ltd chief executive Guy Hutchings. "The fact that the local market fell away quite dramatically at the end of the session implies that traders didn't want to hold stocks over the weekend, which indicates the nervousness is likely to continue well into next week," he added. Allan Kohler, author of tipsheet the Eureka Report, said the falls were driven by a "flight to safety on stock markets around the world." "In panic, investors are selling any risky assets they own," he added. "It is likely there are going to be more shocks." Singapore's Straits Times Index fell 3.17 per cent to 3,304.86 despite a government report that said the city-state's economy expanded 8.6 per cent in the second quarter and "prospects in Asia remain robust." "The chief downside risk is the potential for current problems in the US credit markets spreading to other financial markets," said Ravi Menon, a Trade Ministry official. Economist Alvin Liew said the volatility in the region was temporary. "For every episode of correction in the US, there has been a recovery in Asia," he said. The losses followed plunges Thursday in Europe and then in the United States, where the Dow Jones Industrial Average went down 2.8 per cent and the Standard & Poor's 500 Index slid 3 per cent in their second worst slides this year. They were only beat on February 27, when a sell-off in China created domino-like falls across the globe. In Hong Kong Friday, the Hang Seng Index dropped 2.88 per cent to 21,792.71, closing 75 minutes early as Tropical Storm Prabuk approached. The mainland indices saw more modest declines. The CSI 300 Index, which tracks stocks on both the Shanghai and Shenzhen markets, fell 1.06 per cent to 4,726.68. The Shanghai Composite Index, which rose in early trading, slipped 0.1 per cent to 4,749.37 while the Shenzhen Composite Index was down 2.17 per cent to 1,319.55. Taiwan's Taiex Index fell 2.74 per cent to 8,931.31. In South-East Asia, the 29-share Philippine Stock Exchange composite index lost 3.05 per cent of its value to close at 3,281.96. Alvin Arogo, senior associate for research at Unicapital Securities, said trading was expected to remain volatile in the Philippines next week as the local bourse track the Dow Jones. "There's a contagion effect because the bulk of transactions in the bourse comes from global investors," he said, adding, "If the US market goes down, foreign investors will always assume greater risk on emerging markets." The Stock Exchange of Thailand index lost 21.9 points in the first minute of trading, down 2.7 per cent from Thursday's close of 811.83. By the afternoon, it had lost 1.83 per cent to 797. The Jakarta Composite Index fell 2.71 per cent to 2,180.57, and the Kuala Lumpur Composite Index dropped 2.19 per cent to 1,284.59 while Vietnam's market fell 0.27 per cent. In New Zealand, the first stock market in the world to open every day, the benchmark NZX-50 index immediately lost 1.5 per cent of its value before recovering some ground, down 1.22 per cent at 4,109.84. Indian, Pakistani and Sri Lankan stocks also were down, but Bangladesh bucked the trend, up 0.12 per cent.
