Asian markets slammed in global selloff

Investors across the region picked up on the mounting anxiety evident in the United States and Europe, where the markets saw fresh carnage on Thursday.

Safe havens were the main beneficiaries, with gold soaring and the yield on US 10-year Treasury bonds briefly touching a new low.

Adding to woes in the region were fears that a slowdown in the galloping growth seen in China -- a key driver of the world economy -- could hit equities.

"Given the bloodbath seen across global equity markets overnight it is not at all surprising to see our market experiencing sharp and broad based losses," said IG Markets analyst Ben Potter in Australia, adding that there was no end in sight.

"From experience, these situations always go on for a lot longer than people think they should.

"Given the global financial crisis is still so fresh in people's minds, the market is going to have to do a lot to win back the confidence of investors, especially the retail sector."

Tokyo tumbled 2.51 per cent, hit by the double-whammy of global fears and the persistently strong yen, with the headline Nikkei index at down 224.52 points to 8,719.24.

Sydney shed 3.51 per cent. The benchmark S&P/ASX 200 was down 149.3 points at 4,101.9.

Seoul plunged 6.22 per cent, with the benchmark KOSPI down 115.70 points at 1,744.88. South Korean exporters such as Samsung Electronics and Hyundai Motor bore the brunt of the losses.

Hong Kong dropped 3.08 per cent with the benchmark Hang Seng Index down 616.35 points to 19,399.92. Shanghai shed 0.98 per cent, or 25.11 points, to finish at 2,534.36.

The worldwide selloff came after Wall Street investment bank Morgan Stanley warned that the US and eurozone economies were "dangerously close" to a double-dip recession.

Stocks were further punished by a fresh round of gloomy economic data from the United States such as jobless claims, and growing doubts about the ability of European banks to withstand the 17-nation eurozone's debt crisis.

The rout continued in European trade, with the continent's main bourses all showing large losses in early trade.

London's FTSE 100 index of leading shares sank 3.07 per cent to 4,935.73 points, Frankfurt's DAX 30 index lost 4.41 per cent to 5,355.79 points, and Paris's CAC 40 index showed a loss of 3.43 per cent to 2,974.54 points.

On Thursday the Dow Jones Industrial Average was down 3.7 per cent at the closing bell, while the broader S&P 500 slumped 4.5 per cent and the tech-heavy Nasdaq Composite plummeted 5.2 per cent.

Oil prices slumped as traders fretted that an economic downturn could erode global energy demand.

New York's main contract, West Texas Intermediate light sweet crude for September delivery, dived $1.42 to $80.96 a barrel in afternoon Asian trade, while Brent North Sea crude for October dipped 79 cents to $106.20.

Gold and US Treasury bonds -- both safe havens in times of trouble -- broke record ground with bullion closing at a record $1,862.00-$1,863.00 an ounce. It had finished Thursday trade at $1,794.00-$1,795.00.

Yields on US 10-year Treasury bonds were down at one point Thursday to an all-time record low of 1.974 per cent, breaking the record of 2.007 per cent set on December 18, 2008, at the height of the US recession.

By the end of the New York day, the 10-year Treasury yield was at 2.07 per cent, compared to 2.17 per cent late Wednesday, while the 30-year yield was at 3.42 per cent, down from 3.57 per cent.

Bond prices and yields move in opposite directions.

A report in The Wall Street Journal that the US Federal Reserve was worried about the liquidity of major European banks contributed to the selloffs in European markets.

French lenders came under especially intense pressure, with Societe Generale losing more than 12 per cent.

"Europe is frankly a mess," said Mike Smith, head of one of Australia's big four banks, ANZ.

"And the United States, which I'm normally much more optimistic about, we've seen a crisis which was created by the partisan nature of its current politics.

"That's created further concern to what was already a pretty fragile recovery," said Smith.

The tumult played out on the currency markets with the euro at $1.4303 and 109.39 Japanese yen, from $1.4337 and 109.70 yen late in New York.

The yen was at 76.50 yen to the dollar in early Japanese trade, from 76.52 overnight in New York.

Despite moves to stall its rise by the Swiss central bank, the Swiss franc strengthened to 1.1381 francs per euro, compared with 1.1464 francs late Thursday in Tokyo.

But it fell to 0.7953 against the dollar from 0.7936.

Concerns are not confined to the developed world. At Deutsche Bank, economists focused on the impact of slower Chinese growth on the rest of the world.

They foresaw a "soft landing" for China this year and next, but concluded that "global stock markets will likely be negatively impacted by a Chinese slowdown".

They said the world's second-biggest economy would grow 8.9 per cent this year, down from 10.3 per cent in 2010, and by 8.3 per cent in 2012, "mostly due to the effect of monetary tightening".

In other markets:

-- Manila closed 1.44 per cent, or 63.64 points, lower at 4,339.90.

Metropolitan Bank and Trust Co. was down 2.89 per cent to 73.80 pesos, while Philippine Long Distance Telephone Co. fell 0.59 per cent to 2,332 pesos.

Top-traded Lepanto Consolidated Mining Co. "A" shares were unchanged at 1.54 pesos.

-- Taipei fell 3.57 per cent, or 272.01 points, to 7,342.96.

HTC was limit-down 7.0 per cent to Tw$719.0 while Hon Hai fell 5.29 per cent to Tw$68.0.

-- Wellington closed down 0.56 per cent, or 18.38 points, at 3,267.84, with a strong performance from Telecom Corp. limiting the market's losses.

Telecom rose 4.4 per cent to NZ$2.72 after announcing its full year net profit after one-off items rose 1.6 per cent. Fletcher Building fell 2.0 per cent to NZ$7.79 and Air New Zealand slipped 1.8 per cent to NZ$1.08.