Tokyo (CBS\AP) -- Asian stock markets tumbled Wednesday, with Japan's Nikkei index sinking nearly 10 percent, as recent steps by the world's major economies to fortify credit markets failed to stem fears that the spreading financial crisis could spawn a global recession.
Japanese shares were hammered hard, with the benchmark Nikkei 225 stock average spiraling down 9.4 percent to close at 9,203.32, the lowest finish since June 2003. The index has lost 24 percent in the last two weeks.
Shares of Toyota Motor Corp. sank 12 percent on reports that its operating profit would fall 20 percent in the fiscal year through March.
"Selling seems almost unstoppable because of uncertainty over the crisis," said Kazuki Miyazawa, market analyst at Daiwa Securities SMBC Co. Ltd. in Tokyo. "Investors simply don't find incentives to buy stocks."
The carnage was also brutal in Hong Kong, where the blue chip Hang Seng index plunged 5.6 percent to 15,871.
To ease the credit crunch, Hong Kong's de factor central bank said it will cut the benchmark interest rate by 1 percentage point to 2.5 percent. The move represents a break from Hong Kong's traditional pattern of following the U.S. Federal Funds target rate, which is now at 2 percent. The authority said it has changed its formula to calculate its base rate from 150 basis points above the prevailing U.S. fed funds rate to 50 basis points.
Less than half an hour before London's FTSE exchange opened Wednesday morning, British treasury chief Alistair Darling announced a plan that will effectually part-nationalize most of the United Kingdom's biggest banks.
"These are extraordinary times," Darling told CBS News partner network Sky News.
The rescue measures, meant to give banks the confidence to lend money to each other for longer periods of time and thus free up the frozen credit market, was focused on a $87.5 billion cash fund made available to the lenders to boost their cash reserves. The measures also included a vow by the government to guarantee all inter-bank loans in Britain.
Darling sought to reassure Britons that the $87.5 billion of their tax money was "not a handout" to banks, but rather a loan that would be repayed to the nation when banks started making profits again.
The announcement was not enough to drag the FTSE out of the red. Minutes after the start of trading Wednesday, the exchange was down two percent.
Selling seems almost unstoppable.
Kazuki Miyazawa,
Tokyo market analyst
Australia's benchmark S&P/ASX200 shed 5 percent, wiping out a 1.7 percent gain on Tuesday after the country's central bank cut its key interest rate by a larger-than-expected 1 percentage point.
Asian markets were deep in the red: South Korea's benchmark index was down 6.1 percent, Thailand's market was down 6 percent, and Indonesia's stock market halted trading when its key index plunged 10 percent.
Investors in Indonesia seemed to be dismissing comments by the central bank governor Tuesday that Indonesia will avoid the worst of the global credit crisis. On Tuesday, the central bank raised interest rates a quarter percentage point, citing a two-year high in inflation.
"People are very, very nervous that Europe will get belted tonight as they didn't see a lot of the late losses in the U.S. session, and people just think it's going to get worse," said Ric Klusman, an institutional dealer with Aequs Securities in Sydney.
In New York Tuesday, the Dow lost more than 5 percent despite efforts by the Federal Reserve to reinvigorate the dormant credit markets by invoking emergency powers to lend money to companies outside the financial sector and buy up mounds of commercial paper, the short-term debt that firms use to pay for everyday expenses like salaries and supplies.
Federal Reserve Chairman Ben Bernanke warned in a speech Tuesday that the financial crisis could prolong the difficulty the economy is facing. While his remarks were widely regarded as a sign that an interest rate cut could be in the offing, Wall Street appeared little comforted and focused on his downbeat assessment.
Photo: A pedestrian walks past an electric stock market board in Tokyo, Oct. 8, 2008. (AP Photo/Katsumi Kasahara)
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Selling seems almost unstoppable.
