Nikkei closes below 10,000; Asia sharply down

By staff and wire reports

HONG KONG, China -- Asian markets took a dramatic turn for the worse on Wednesday. The key Tokyo and Hong Kong indexes both closed under 10,000.

A mass of Asian companies fell the daily limit allowed by their respective exchanges, as terrorist attacks in the United States raised the specter of a world recession.

Japan's Nikkei index collapsed through the 10,000 barrier at the open, ending with a loss of 6.6 percent at 9,610.10.

In Hong Kong, the Hang Seng index also shattered through a separate 10,000 mark. Hong Kong's U.S.-linked market took a heavy knock, ending down 8.9 percent at 9,493.62.

South Korea's market took the heaviest hit. The benchmark Kospi sank 12.0 percent to end down at 475.60.

Markets in Australia and New Zealand both lost just over 4 percent. Singapore ended down 7.4 percent.

Investors flee stocks

Investors fled risky products such as stocks and sought refuge in the safest products they could find, like commodities, cash and bonds. Asia's economies are also some of the most dependent on exports in the world.

Experts said the terrorist attacks that reduced the Twin Towers of the World Trade Center to rubble Tuesday will likely be the coup de grace for U.S. consumer confidence. Until recently it had stayed relatively strong.

The Nikkei ended with a loss of 682 points on the day, as stocks of exporters like Toyota fell the maximum allowed

Japan, the world's second-largest economy, had been relying on a U.S. rebound to spur its own turnaround. It is likely headed into its fourth recession in a decade.

The collapse of U.S. demand and sentiment will likely see exports fall off even more. With financial problems still unresolved in Japan and the rest of Asia from the financial crisis in 1997, Asia economies risk a headlong descent, experts said.

U.S. markets were closed Tuesday, as business ground to a halt. So investors expected Asian markets that did open Wednesday to bear the full brunt of negative sentiment.

They did. The Nikkei dropped immediately and ended Wednesday at its lowest level since December 1983. It was the first time in 17 years it fell below 10,000.

Exporters punished in Japan

Tokyo's broader Topix index lost 67.32 points or 6.36 percent to 990.80. It is still above its October 1998 low, of 980.11.

Exporters such as Toyota Motor and chipmaker NEC fell the daily limit, on fears shipments to the United States will fall.

Toyota, the largest stock trading in Japan, ended down 6.85 percent at 3,400 yen.

NEC fell 8 percent to 1,150 yen. Tech standard bearer Sony Corp. also lost the daily limit, down 5.0 percent at 4,730 yen.

The world's biggest bank by assets, Mitsubishi Tokyo Financial Group, fell 9.1 percent to 945,000 yen.

Some of the only gainers were Japan's oil-related stocks. Oil prices were soaring on the prospects of a U.S. retaliation affecting the Middle East.

Traders said they expect sharp losses when U.S. trading resumes.

China oil stocks only light in Hong Kong

Stocks plunged over 10 percent soon after the open in Hong Kong. The Hang Seng's 8.9 percent drop by the close reduced it to its lowest level since early 1999.

Traders said they saw some short covering, and the effect was not as bad as some expected.

But they see little upside. Hong Kong stocks are some of the most closely tied to the United States, with a currency pegged to the dollar and a heavy U.S. business bent.

The market's biggest listing, bank giant HSBC Holdings, slumped 6.57 percent to HK$81.75, after diving 13.35 percent in London on Tuesday.

Again, some of the only gainers were oil stocks. China's largest oil company, PetroChina, gained 1.65 percent to HK$1.60.

But Sinopec, which is more focused on petrochemicals, was down 2.61 percent, as the higher crude price could increase the price of its products.

Airline Cathay Pacific Airways fell 15.57 percent to HK$7.05 in early Wednesday trade, their lowest level since late 1998, following heavy losses in European airline stocks.

Tuesday's events could hurt people's perception of airline safety and increase fuel prices.

Australia's losses more muted

In Australia, stocks fell to their lowest close since June 2000.

The fall in Sydney's benchmark S&P/ASX 200 index, down 133.5 points or 4.1 percent to 3,108.5, was the least-pronounced in the Asia-Pacific region.

Still, about seven stocks fell for every one that gained. The largest listing, media giant News Corp., plunged 10.6 percent to A$13.50.

That's its lowest close since November, 1999. News gets around 70 percent of sales from the United States. An Australian employee said no offices were damaged by the attack.

Qantas Airways, which has cancelled flights to the United States for the time being, lost 9.3 percent to A$3.12.

It also announced that it has decided not to buy any of debt-ridden airline Ansett's assets from Air New Zealand.

Australian property group Westfield Holdings, which runs retail operations for the World Trade Center, finished down 5.1 percent at A$16.70.

But it said it was fully insured against loss of income.

Australia's oil stocks rallied. Oil and gas producer Woodside Petroleum rose 0.7 percent to A$13.66.

New Zealand's benchmark NZSE-40 capital index fell 4.6 percent to 1,873.47. The largest stock, Telecom New Zealand, fell 6.4 percent to NZ$4.35, its lowest since August 1993.

Seoul's benchmark Kospi fell 12.0 percent to 4375.60 in a shortened three-hour session. That was the biggest one-day drop since 1988.

Over two-thirds of Korean stocks fell the daily limit.

Markets were closed in Taiwan, Malaysia and Thailand.

Singapore's Straits Times index closed down 7.4 percent at a 30-month low of 1,450.45. Only 20 stocks rose, with 332 falling and 173 hitting new lows.

Stocks in India were down 4.3 percent at 3,015.00 in afternoon trade. In the day, the market sank to 2,997.64, the lowest point since December 1998.

Reuters contributed to this report.