TOKYO - A MELTDOWN in confidence strangled Asian stock markets on Wednesday on accelerating fears that the widening financial crisis could spawn a global recession.

Anxious investors in Tokyo sent shares into a free-fall, with the benchmark Nikkei 225 stock average plunging 9.4 per cent - its biggest drop in 21 years - to 9,203.32, a five-year low.

'Selling on Wall Street triggered further selling in Tokyo. It's like a chain reaction,' said Mr Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. Ltd.

'No one knows the bottom of the ongoing financial crisis, and investors were really spooked by growing uncertainty over the global credit crisis,' he said.

Accelerating the pessimism were doubts that finance ministers and central bankers from the Group of Seven nations would unveil any effective measures at their meeting in Washington on Friday.

Indonesian authorities shut down trading for the day on the country's exchange after the key index plunged more than 10 per cent, driven by huge losses in commodities stocks.

On Tuesday, Bank Indonesia had raised interest rates a quarter percentage point, citing a two-year high in inflation - in contrast to the big rate the same day in Australia.

Investors dismissed comments by the central bank governor a day earlier that Indonesia will avoid the worst of the global credit crisis.

'What is happening is panic selling to an extent that it is irrational,' said Mr Irvin Patmadiwiria, the head of investments at PT Lautan Dana Investment Management.

Hong Kong's de factor central bank said on Wednesday it would slash its benchmark interest rate by 1 percentage point to 2.5 per cent to help ease the credit crunch.

The move by the Hong Kong Monetary Authority, effective on Thursday, is a break from the territory's traditional pattern of closely tracking the US Federal Funds target rate, now at 2 per cent.

The HKMA revised its formula for calculating its base rate from 150 basis points above the prevailing US fed funds rate to 50 basis points.

'One has to do extraordinary things at extraordinary moments,' said Mr Jacky Choi, a Hong Kong-based fund manager at Value Partners Ltd, which manages about US$5 billion in Asia.

Russian news agencies say Moscow's MICEX stock exchange, where most of Russia's trading takes place, has shut until Friday after losing more than 14 per cent in the first half-hour of trading on Wednesday.

It was a brutal day across Asia.

Hong Kong's blue chip Hang Seng index shed 5.2 per cent, and India's Sensex sank 4.3 per cent. Seoul's Kospi lost 5.8 per cent, Taiwan's key index fell 5.8 per cent, and Singapore's benchmark tumbled 5.5 per cent.

Australia's benchmark S&P/ASX200 closed down 5 per cent, wiping out gains on Tuesday after the country's central bank cut its key interest rate by a bigger-than-expected 1 percentage point.

'People are very, very nervous that Europe will get belted tonight as they didn't see a lot of the late losses in the US session, and people just think it's going to get worse,' said Mr Ric Klusman, an institutional dealer with Aequs Securities in Sydney.

In New York on Tuesday, the Dow lost more than 5 per cent despite efforts by the Federal Reserve to reinvigorate the dormant credit markets by invoking emergency powers to lend money to companies outside the financial sector and buy up mounds of commercial paper, the short-term debt that firms use to pay for everyday expenses like salaries and supplies.

Federal Reserve Chairman Ben Bernanke warned in a speech on Tuesday that the financial crisis could prolong the difficulty the economy is facing.

While his remarks were widely regarded as a sign that an interest rate cut could be in the offing, Wall Street appeared little comforted and focused on his downbeat assessment.

The downturn bodes ill for major Asian exporters dependent on the US for a big chunk of their business.

Shares of Toyota Motor Corp plunged 11.6 per cent on Wednesday, as investors recoiled on reports that operating profit at Japan's top automaker would fall 40 per cent this fiscal year through March.

The automaker's operating profit is expected to total about 1.3 trillion yen (S$18.8 billlion), short of the 1.6 trillion yen forecast, according to the Nikkei financial daily.

It may also miss its global sales target of 9.5 million units this year, the paper said.

Other Japanese carmakers were also dragged down on the news, as well as a wilting dollar. Honda Motor lost 10.3 per cent, and Nissan Motor was off 9.9 per cent.

In currencies, the dollar briefly fell below 100 yen for the first time in six months. It sank as low as 99.58 yen and was trading at 100.45 yen on Wednesday afternoon in Asia. The euro gained to US$1.3652 compared with US$1.3550.

TOKYO
Japanese share prices plunged 9.38 per cent on Wednesday, the biggest loss in more than two decades as panic-selling erupted over the global financial crisis.

The Tokyo Stock Exchange's benchmark Nikkei-225 index dived 952.58 points to end at 9,203.32. At one point the index was down 9.81 per cent.

It was the worst day for Asia's largest bourse since a 14.9 per cent plunge on October 20, 1987 in the wake of the 'Black Monday' crash in the United States.

KUALA LUMPUR
Malaysian share prices closed lower on Wednesday, dropping 2.7 per cent, following the downtrend in regional markets amid fresh concerns over the global economy, dealers said.

The Kuala Lumpur Composite Index shed 27.04 points to 970.19, off a new intraday and year-low of 959.49 points.

Losers led gainers 579 to 99 while 167 counters were unchanged and turnover for the day was 649.6 million shares worth 1.28 billion ringgit (S$537.8 million).

Dealers said the declines were in line with regional markets, triggered by rising concerns over the global banking industry and increasing risk of global recession.

'The market was down following regional concerns over the UK banking crisis and there were fears that more banks could be affected by this,' said Mr Kaladher Govindan, research head at local brokerage TA Securities.

Dealers said the benchmark index is likely to trade within 950 and 980 range on Thursday.

'There is a very real fear that economies around the globe are heading into a prolonged period of slowing down or contraction in growth. We are already seeing a contraction in our foreign reserves as a result of the capitulation of foreign portfolio funds,? a dealer told Dow Jones Newswires.

Among plantation stocks, IOI Corp lost 5.2 per cent at 3.68, Kulim shed 4.7 per cent at 5.10 ringgit and KL Kepong ended down 6.3 per cent at 1.8 per cent at 8.30 ringgit.

Banking stocks came under pressure with Malayan Banking retreating 7.1 per cent to 5.90 ringgit and Public Bank closing down 2.5 per cent at 9.65 ringgit.

SHANGHAI
Chinese share prices closed down 3.04 per cent on Wednesday led by financial companies as investors took cues from the broad sell-off in Wall Street and other Asian markets, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, was down 65.62 points at 2,092.22 on turnover of 40.8 billion yuan (S$8.81 billion).

The Shanghai A-share index fell 68.83 points, or 3.04 per cent, to 2,197.27 points on turnover of 40.7 billion yuan, while the Shenzhen A-share index was down 15.93 points, or 2.59 per cent, to 599.68 on turnover of 15.1 billion yuan.

HONG KONG
Hong Kong shares closed down 8.2 per cent on Wednesday, as fear over the fragility of the global banking system consumed investors across Asia, dealers said.

The benchmark Hang Seng Index dropped 1,372.03 points to 15,431.73, its lowest level in more than two years. Turnover was 77.78 billion Hong Kong dollars (S$14.7 billion).

Tuesday was a public holiday in the Chinese territory.

Markets across Asia dropped violently on Wednesday, as the global banking industry was plunged into turmoil on worries that credit was drying up and doubts about a string of government rescue plans. -- AP, AFP, BERNAMA, THOMSON REUTERS