Asian stock markets sink amid anxiety over global economy

Asian stock markets sank Monday, with Japan's benchmark tumbling to a 26-year closing low, amid deepening anxiety that economies in the U.S. and elsewhere will take far longer to emerge from recession.

Investors continued to shun banks on worries the financial sector still hasn't raised enough capital to make up for its massive losses on bad assets. Heavyweight lender HSBC, Europe's largest bank, plunged more than 24 per cent in Hong Kong trade.

Japanese shares, already among Asia's worst performing this year, crumbled further after the world's second-largest economy posted a record current account deficit in January, its first in 13 years.

Oil prices, meanwhile, were higher ahead of an anticipated production cut from OPEC.

Recent losses in Asian markets, while somewhat tame compared to those in the West, have still been severe as investors ratchet down their expectations for global growth in the face of abysmal economic data and signs of ongoing struggles at banks and major firms like General Motors.

"Sentiment is terrible," said Ben Pedley, managing director of LGT Investment Management Ltd. in Hong Kong. "We're going to be in a funk, not only in Asia, but in the rest of the world for the next year or two."

Japan's Nikkei 225 stock average fell 87.07 points, or 1.2 per cent, to 7,086.03, and Hong Kong's Hang Seng tumbled 576.94, or 4.8 per cent, to 11,344.58 on the coattails of HSBC, a huge component in the index.

Also weighing on Hong Kong were steep falls in mainland markets, where investors booked some profits after the government didn't announce new and bigger policies to stimulate the economy at an ongoing legislative meeting. Shanghai's benchmark plummeted 3.4 per cent.

Stock measures in India, Singapore and Taiwan also fell; those in South Korea and Australia gained 1.6 per cent and 0.3 per cent respectively.

Friday in New York, Wall Street ended a volatile session slightly higher after investors digested news that the world's largest economy shed 651,000 jobs last month. The unemployment rate jumped to a 25 year high of 8.1 per cent.

The Dow rose 32.50, or 0.5 per cent, to 6,626.94. The Standard & Poor's 500 index rose 0.83, or 0.1 per cent, to 683.38, while the Nasdaq composite index fell 5.74, or 0.4 per cent, to 1,293.85.

Wall Street futures pointed to a weaker open in the U.S. Dow futures were down 70 points, or 1.1 per cent, at 6,604 while S&P500 futures fell 9.8 points, or 1.4 per cent, to 678.

In the oil market, benchmark crude for April delivery rose 61 cents to $46.16 a barrel in Asia as investors anticipated another OPEC production cut will shrink global supplies.