HONG KONG: Mounting fears about tattered government finances in Europe drove the euro down and hammered stock markets across Asia on Friday following New York's worst finish since November.
The European currency sank to an eight-month low with risk-averse investors bolting for the safe-haven dollar, despite concern that US jobs data out later in the day would flag enduring weakness in the world's largest economy.
"What we're seeing is a wave of panic selling," said Francis Lun, general manager of Fulbright Securities in Hong Kong, where the Hang Seng index tumbled below the key 20,000 level in early trade for the first time in five months.
The euro dropped to US$1.3670 at one point in Tokyo, the lowest level since late May 2009. In Tokyo afternoon trade it stood at US$1.3707, from US$1.3726 in New York late on Thursday. It was hovering around US$1.3650 in London early on.
"European debt concerns have strengthened the US dollar and this has stoked concerns that... risk aversion may heighten further," Min Sang-Il of E*Trade Securities in South Korea told Dow Jones Newswires.
The Hang Seng ended 3.33 per cent, or 676.56 points, lower at 19,665.08.
"With the sell-off on Wall Street, traders should enter today's market with a good crash helmet," CIMB analysts in Singapore said.
Tokyo plummeted 2.89 per cent, or 298.89 points, to end at 10,057.09.
The Nikkei's dive came despite a 1.06 per cent rise in Toyota shares after the recall-plagued carmaker lifted its earnings forecast.
Seoul ended 3.05 per cent, or 49.30 points, down at 1,567.12.
In Australia, the SandP/ASX200 plunged 2.32 per cent to end at 4,514.3.
Miner BHP Billiton fell 3.5 per cent to A$39.55 and ANZ Bank was down 2.4 per cent at 20.90.
The European currency was hit by increased fears that crisis-hit EU members such as Spain and Portugal could face the same troubles as debt-ridden Greece.
It was also weighed by the European Central Bank's decision to maintain record-low interest rates.
"A spike in risk aversion following renewed concerns about the health of European sovereigns saw equity markets pummelled," NAB Capital analysts wrote in a note to clients.
Stocks in Spain and Portugal were hammered, while London's benchmark FTSE 100 index plunged 2.17 per cent to close at 5,139.31 points.
Markets across Europe all opened lower on Friday, with Spain and Portugal hardest-hit.
"It's very bad sentiment for the euro, it's a sell-off for the euro definitely," said Lee Sue Ann, a treasury economist with Singapore's United Overseas Bank.
And Ben Potter, IG Markets strategist in Australia, said: "It seems the problems in Europe are only deepening."
The shockwaves across Asia came after Wall Street's Dow Jones index dived 2.61 per cent to end at 10,002.18, its lowest since November, after a brief dip below 10,000.
In advance of Friday's Labor Department survey of non-farm payrolls, weak data on US jobless claims combined with heightened fears of debt problems in European Union countries to drive investors away from equities.
Shanghai ended 1.87 per cent, or 55.91 points, at 2,939.40.
Banks led the decline after recent moves by Chinese authorities to rein in lending, while miners were also down with lower commodity prices worldwide.
and#8212; Taipei tumbled 4.30 per cent, or 324.21 points, to 7,217.83.
Cathay Financial fell 6.39 percent to NT$49.80 and Prince Housing shed 6.59 percent to 12.75.
Taiwan Semiconductor Manufacturing Co fell 3.21 per cent to 57.20 and United Microelectronics Corp lost 4.85 per cent to 15.70.
and#8212; Jakarta lost 2.86 percent, or 74.25 points, to 2,518.97.
Coal miner Indo Tambangraya Megah plunged 6.1 per cent to 30,100 rupiah, while rival Bumi Resources shed 4.9 per cent to 2,425 rupiah.
and#8212; Kuala Lumpur 1.35 per cent, or 17.13 points, to 1,247.90.
Leading bank CIMB was down 2.2 per cent to RM12.42 while builder IJM lost 5.70 per cent to RM4.31.
and#8212; Wellington ended 1.40, or 43.95 points, down at 3,104.99.
Fletcher Building closed down 2.3 per cent at NZ$7.52, Telecom lost 4.1 per cent to NZ$2.31 and Contact Energy fell 0.5 per cent to NZ$5.81.
and#8212; Manila shed 2.03 per cent, or 59.23 points, to close at 2,855.64.
Philippine Long Distance Telephone was off 1.7 per cent at 2,535 pesos and Ayala Land was off 2.4 per cent at 10.25.
and#8212; Bangkok lost 11.11 points or 1.58 per cent to close at 691.41.
Banpu fell 18.00 baht to 540.00 baht and PTT Plc dropped 4.00 baht to 218.00 baht.
and#8212; Mumbai fell 2.68 per cent, or 434.02 points, to 15,790.93, a three-month low.
Aluminium producer Hindalco fell 5.51 per cent to 138.1 rupees and Tata Steel tumbled 4.65 per cent to 550.45. -- AFP