HONG KONG - ASIAN stock markets fell sharply on Thursday, with benchmarks in Tokyo and Hong Kong tumbling about 4 per cent, as more evidence of company woes and a weak US job market rekindled worries about the unfolding global slump. European markets opened lower.

Every major market in Asian suffered declines, marking an end to a New Year's rally that had been spurred by speculation that massive government spending and low interest rates would lead to an economic rebound later this year.

But hopes seem to fade after dour outlooks from tech heavyweight Intel, computer maker Lenovo and aluminum producer Alcoa, among others, highlighted the toll that the economic slump is taking on companies around the world. A worse-than-expected reading of the US labour market only added to investor fears.

'The economic reality is sinking in for investors and 'the hope rally' that many thought would last until Obama's inauguration seems to be at least fizzling for now,' said Mr Kirby Daley, senior strategist at Newedge Group in Hong Kong. 'While there is potential for a bear market rally to re-emerge, I would be very leery of buying at current levels.'

Tokyo's Nikkei 225 stock average lost 362.82, or 3.9 per cent, to 8,876.42, snapping a seven-day winning streak as the yen traded higher, and Hong Kong's Hang Seng Index fell 571.55 points, or 3.8 per cent, to 14,415.91.

Elsewhere South Korea's Kospi shed 1.8 per cent, Australia's benchmark dropped 2.3 per cent and Taiwan's key index lost 5.3 per cent. India's market, which plunged on Wednesday after the chairman of major outsourcing company Satyam Computer admitted doctoring the firm's accounts for several years, was closed for a holiday.

European shares followed Asia lower in early trade, though the losses weren't as steep. Britain's FTSE 100 was off 0.2 per cent, Germany's DAX shed 0.7 per cent and France's CAC 40 dropped 0.4 per cent.

Weighing on global trade was overnight weakness on Wall Street.

US investors sent stocks sharply lower after Intel warned about poor business conditions and an employment survey showed the private sector shed a greater-than-expected 693,000 jobs in December, fraying nerves ahead of Friday's employment report from the government.

The Dow average tumbled 245.40, or 2.7 per cent, to 8,769.70, its biggest point and percentage decline since Dec 1. Broader stock indicators also tumbled, with the S&P 500 index falling 28.05, or 3 per cent, to 906.65. European markets fell sharply as well.

US futures pointed to a mixed open in New York. Dow futures were down 35 points, or 0.4 per cent, at 8,709 and S&P500 futures were up 0.3 point at 900.10.

As in the US, news on the corporate front in Asia was grim.

Shares in Lenovo Group plunged more than 26 per cent in Hong Kong trade after the world's fourth-largest computer maker warned it expects a loss for its latest quarter and will lay off 11 per cent of its workforce and cut executive pay.

Meanwhile, Cathay Pacific, Asia's No. 3 carrier, said it could lose nearly US$1 billion (S$1.48 billion) from bad hedges on jet fuel and reiterated its profit warning for 2008, saying passenger and cargo traffic had weakened significantly. Cathay's shares shed 7.6 per cent in Hong Kong.

In Australia, shares in Macquarie Group Ltd dropped 3.7 per cent after the country's leading investment bank said 'exceptionally challenging' market conditions in the fourth quarter would hurt profits.

Bank of China, the mainland's No. 3 lender, fell 8.4 per cent in Hong Kong after billionaire Li Ka-shing's foundation sold more than US$500 million worth of shares in the bank, becoming the latest investor to cut its investment in China's financial sector.

Across the region, energy and raw materials producers took a beating as commodity prices fell sharply overnight. Australia's BHP Billiton Ltd, the world's largest mining company, skidded 5.7 per cent, and Chinese oil producer CNOOC lost 6.7 per cent in Hong Kong.

After a higher-than-expected increase in US inventories sparked a 12 per cent plunge in crude overnight, oil prices were relatively steady in Asian trade on Thursday.

Light, sweet crude for February delivery rose 54 cents to US$43.17 a barrel in electronic trading on the New York Mercantile Exchange.

The contract plunged US$5.95 overnight to settle at US$42.63.

In currencies, the dollar weakened to 91.96 yen, down from 92.68.

The euro traded lower at US$1.3572 from US$1.3611, though flucuated in the session.

TOKYO
Japanese share prices closed down 3.93 per cent on Thursday, snapping a seven-day winning streak after grim economic and corporate news triggered heavy losses on Wall Street overnight.

The benchmark Nikkei-225 index dropped 362.82 points to 8,876.42, a day after closing at a two-month high.

The Nikkei had risen 8.5 per cent over the previous seven sessions on optimism about US president-elect Barack Obama's plans to boost the economy.

HONG KONG
Hong Kong share prices closed 3.8 per cent lower on Thursday, after Chinese banks plunged on worries about strategic investors offloading their stakes, dealers said.

The benchmark Hang Seng Index closed down 571.55 points at 14,415.91.

Turnover was HK$55.52 billion (S$10.62 billion).

SHANGHAI
Chinese shares slumped 2.38 per cent on Thursday as selling in banks continued on worries that big investors would offload more financial shares, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed down 45.83 points at 1,878.18 on turnover of 55.1 billion yuan (S$11.95 billion).

Banks led the decline on concerns more foreign investors would sell down their holdings in Chinese lenders following recent divestments in Hong Kong by the charity Li Ka Shing Foundation, Bank of America and UBS.

The foundation sold two billion Hong Kong-listed shares in Bank of China that raised US$511 million (S$757.5 million) for the charity owned by the city's richest man, Dow Jones Newswires reported, citing a term sheet for the sale.

The announcement came after Switzerland's biggest bank UBS said last week it had sold about 3.4 billion shares in Bank of China through a placing to institutional investors.

The Shanghai A-share index fell 48.24 points, or 2.39 per cent, to 1,971.86 on turnover of 54.9 billion yuan, while the Shenzhen A-share index shed 12.19 points, or 1.98 per cent, to 602.31 on turnover of 32.4 billion yuan.

The Shanghai B-share Index fell 0.99 points, or 0.84 per cent, to 117.0, while the Shenzhen B-share Index shed 6.16 points, or 2.14 per cent, to 280.95.

KUALA LUMPUR
Share prices headed south at close on further selling pressure in heavyweights, particularly plantation stocks, as investors remained cautious ahead of the United States job data to be released late tomorrow, dealers said.

At the closing bell, the Kuala Lumpur Composite Index (KLCI) dropped 17.10 points or 1.843 per cent to 910.52, dragged down by losses mostly in Sime Darby and IOI Corporation.

It opened 8.89 points lower at 918.73 compared to Wednesday's close of 927.62.

The CI moved between 907.04 and 919.16 during the trading day.

The dealers also said persistent profit taking particularly in plantation stocks was due to expectations that commodity prices had hit a limit and would likely drop in coming weeks.

The Industrial Index went down 49.99 points to 2,117.96, the Finance Index slashed 92.05 points to 7,204.51 and the Plantation Index lost 214.88 points to 4,541.06.

The FBMEmas dropped 114.86 points to 5,959.51, the FBM30 was 117.78 points lower at 5,864.68, FBMMesdaq decreased 62.46 points to 3,386.36 and the FBM2BRD declined 55.06 points to 3,995.79.

Losers thumped gainers by 390 to 97 while 171 counters were unchanged, 616 untraded and 49 others suspended.

Turnover dropped to 390.95 million units worth RM632.27 million (S$265 million) from Wednesday's close of 743.515 million shares valued at RM1.116 billion. -- AFP, BERNAMA