Asian stocks plunge on growing worries over US housing slump

TOKYO : Asian stocks plunged again in early trade Monday, battered by growing fears that the fallout from the US housing slump will spread across the global economy, dealers said.
They said the Chinese central bank's latest move to try to cool the economy had further rattled investors following another big sell-off on Wall Street on Friday.
Tokyo slumped 3.7 percent, dropping below the key 15,000 points level briefly in early afternoon trade for the first time for almost 16 months as increased risk aversion lifted the yen, weighing heavily on exporters.
Shanghai also tumbled 3.7 percent after the central bank announced another hike in the bank reserve requirement.
Hong Kong followed suit, sliding 3.5 percent, while Seoul dropped 3.8 percent and Singapore gave up 2.7 percent.
"The overall market sentiment is turning bad," said Castor Pang, strategist at Sun Hung Kai Financial in Hong Kong.
"A lot of negative factors are weighing on the market such as the drop in the Dow Jones (on Friday) and the latest increase in the reserve ratio."
The gloom on Wall Street has intensified in recent days with investor confidence shaken by news of growing losses at major banks linked to the sub-prime mortgage crisis to homebuyers with patchy credit histories.
"Investors are holding back from reacting to the bargain levels of shares, as they are increasingly wary of financial and economic problems in the US, which may now linger for longer than previously expected," said Hiroichi Nishi, general manger of equities at Nikko Cordial Securities in Tokyo.
Markets are increasingly nervous that the overall US economy could be more severely affected than previously thought, which would in turn hit Asian exports to the world's largest economy.
"The sub-prime problem is not just affecting the US financial sector," said Michael Chen, vice president for research at CSC Securities HK Ltd.
"It is spreading out to the economy, which will affect other countries because the US is a major export destination."
Investors drew little comfort from a sharp drop in world oil prices after heavyweight producer Saudi Arabia indicated that the OPEC oil cartel will discuss raising output if the need arises, dealers said.
New York's benchmark light sweet crude contract for December delivery was down about a dollar a barrel in early Asian trade.
There was little sign of an easing of the selling pressure that has wiped almost 10 percent off the value of Tokyo's Nikkei index over the past six sessions.
Japan's government said it was taking a close interest in the slumping stock market.
"We have to watch developments very carefully," said Chief Cabinet Secretary Nobutaka Machimura, the top government spokesman.
Over the weekend China's central bank raised the reserve requirement for banks by 50 basis points to 13.5 percent, effective November 26.
It was the ninth time this year that the reserve requirement, or the amount of deposits that banks must park with the central bank, has been increased in an effort to curb bank lending and slow economic growth.
The move added to the gloomy mood around the region.
Taipei fell 3.5 percent, Kuala Lumpur shed 1.4 percent and Manila declined 2.0 percent.
"The sub-prime problem seems to have turned for the worst with indications that the fallout may be spreading beyond the US financial system," said Francisco Liboro, president of PCCI Securities in Manila.
Elsewhere Sydney was down 0.5 percent, cushioned somewhat by speculation that the world's largest mining company BHP Billiton will raise its bid for rival Rio Tinto.