Asian stocks plunge as US House bailout rejection sparks crisis in confidence

Tokyo: Asian stocks plunged, extending the worst global sell-off in 21 years, after the rejection of a $700 billion bank bailout plan by US lawmakers deepened concerns that more economies will slide into a recession. Japanese bonds and the yen climbed.

Mitsubishi UFJ Financial Group Inc. and DBS Group Holdings Ltd. led declines in financial shares as money-market rates and corporate bond risk rose.

BHP Billiton Ltd. and SK Energy Co. dropped after oil fell more than $10 on Monday, the most in seven years, and US stocks tumbled by the most since the 1987 crash. Regulators in South Korea and Taiwan banned short selling to help stem market declines.

The MSCI Asia Pacific Index fell 2.7 percent to 108.38 as of 12:56 pm in Tokyo, adding to a five-day, 4.9 per cent retreat. The yen rose against the euro as investors cut holdings of higher-yielding assets funded in the Japanese currency, trading at 149.56 per euro from 150.38.

Japan's Nikkei 225 Stock Average lost 2.6 percent to 11,434.35, heading for its lowest since June 2005. Taiwan's Taiex index dropped 4.1 percent, the most in the region. China's markets are closed this week for holidays.

Global Rout

The Standard & Poor's 500 Index tumbled 8.8 percent on Monday following the US House of Representatives voted down the financial-rescue proposal. The MSCI World Index of 23 developed markets slid 6.9 percent, the biggest loss in 21 years.

South Korea and Taiwan on Monday placed temporary bans on short selling, while Hong Kong regulators said they will take "more aggressive'' measures against the practice. Short sellers try to profit by betting stock prices will fall.

Mitsubishi UFJ, Japan's largest bank, retreated 4.4 percent to 896 yen. DBS, Southeast Asia's biggest, lost 2 percent to S$16.56 in Singapore. Babcock & Brown Ltd. tumbled 3.4 percent to A$2.27 in Sydney, taking its decline this year to 94 percent, the worst performance on the MSCI Asian index.

Meanwhile, BHP, the world's largest mining company, slipped 5.9 percent to A$32.22. SK Energy, South Korea's biggest oil refiner, fell 3.8 per cent to 88,500 won. Fortescue Metals Group Ltd., an Australian iron-ore producer, slipped 10 percent to A$5.04, down 61 percent from its June 24 peak.
Crude oil slumped 9.8 percent on Monday to $96.37 a barrel in New York, helping send the Reuters/Jefferies CRB Index of 19 commodities to the biggest drop since at least 1956. It slid another 1 percent to $95.40 a barrel today.

Japanese bonds rose, with 10-year yields reaching a two- week low after government reports today showed household spending fell for the sixth consecutive month and unemployment increased more than estimated in August.

The yield on the 1.5 percent bond due September 2018 fell 3.5 basis points to 1.45 percent.