Decay spreads in Asian marts

GLOBAL MARKETS/ STOCK REPORT

Asian stocks and the dollar tumbled after the Federal Reserve cut its discount interest rate at an emergency meeting. The fall was accentuated by JPMorgan Chase's decision to buy Bear Stearns for $2 a share.

All Asian stock indices fell, led by financial shares including Mitsubishi UFJ Financial Group in Tokyo.

Benchmarks in Japan and Hong Kong slumped more than 3 per cent as concern spread Bear Stearns' troubles may be shared by other companies.

"This is a serious crisis," said David Goldman, senior portfolio strategist at Asteri Capital in New York and former head of debt research at Banc of America Securities.

"Something is systemically very wrong and we're at a very dangerous moment."

The MSCI Asia Pacific Index fell 2.4 per cent to 132.65, 23 per cent down from its November high.

Japan's Nikkei 225 Stock Average tumbled 3.7 per cent, while the Hang Seng Index slid 5.2 per cent in Hong Kong.

Financial shares led declines in Asia. Mitsubishi UFJ Financial, Japan's biggest lender by market value, slumped 4.8 per cent to 789 yen, the lowest since February 10, 2004.

EUROPE
The Fed's decision had a bearish effect on stocks in Europe as well.

UBS AG, Europe's biggest bank by assets, dropped to a five-year low in Zurich. Siemens AG, Europe's biggest engineering company, had its steepest decline in at least 18 years after saying earnings will be cut because of order delays and cancellations at the energy, transport and technology units.

The MSCI World Index lost 1.1 per cent to 1,393.13 as of 10:43 am in London.

Dow Jones Stoxx 600 Index sank to the lowest since 2005.

US
US stock-index futures tumbled after JPMorgan Chase agreed to buy Bear Stearns for less than a 10th of the bank's value and the Federal Reserve lowered its discount rate in an emergency meeting.

Bear Stearns, Lehman Brothers Holdings and Goldman Sachs Group plunged. UBS AG downgraded US financial shares on concern liquidity problems may worsen. Bear Stearns, Wall Street's fifth-largest securities firm, lost its independence after 85 years following a run on the company.

Standard & Poor's 500 Index futures expiring in June sank 2 per cent to 1,267.8 at 10:05 am in London. Dow Jones Industrial Average futures declined 1.5 per cent to 11,800. Nasdaq-100 Index futures decreased 1.9 per cent to 1,691.25.