HONG KONG - WORLD stock markets tumbled by as much as 7 per cent on Thursday, following Wall Street lower as US presidential election euphoria gave way to worries about the global economy and company profits.

Japan's Nikkei stock average retreated 6.5 per cent to 8,899.14, and Hong Kong's Hang Seng Index lost 7.1 per cent to 13,790.04.

South Korea's benchmark Kospi index broke a five-session winning streak to dive 7.6 per cent. Markets in Singapore, Australia and mainland China also dropped sharply.

European stocks got off to a weak start, with benchmarks in Germany, Britain and France down about 3 per cent.

The pullback was in line with weakness on Wall Street, where investor optimism surrounding the election of Democrat Barack Obama as president quickly evaporated in the face of gloomy economic news.

The US service sector, the largest component of America's gross domestic product, contracted sharply in October as new orders and employment fell.

Closer to home, a series of profit warnings from major companies such as Japan's Toyota Motor and Isuzu Motors and Hong Kong carrier Cathay Pacific Airways yanked the markets back to the reality of depressed economic conditions.

After seeing some strong gains in recent days, many investors moved to take profits.

'We had one week of a rebound and then we're coming back to reality,' said Mr Francis Lun, general manager of Fulbright Securities in Hong Kong. 'Despite the euphoria over the election, the world's economy hasn't changed.'

In New York on Wednesday, volatility swept over the US market again, with the Dow Jones industrial average falling 486.01, or 5.1 per cent, to 9,139.27. The S&P 500 index and the Nasdaq composite also shed more than 5 per cent each.

US stock index futures were down, suggesting Wall Street would open lower. Dow futures were down 107 points, or 1.1 per cent, to 9,070, while S&P futures were down 12.9 points, or 1.4 per cent, to 945.1.

In Tokyo, investors sold exporters on a stronger yen. Toyota fell 10.3 per cent as the country's biggest automaker slashed its earnings forecast for the full year to less than a third of what it was the previous year.

Isuzu shares tumbled 20.7 per cent after the truck maker announced a larger-than-expected cut to full-year earnings estimates the previous day. Electronics maker Panasonic lost 8.5 per cent.

A stronger yen versus the dollar would be particularly bad news for Japanese exporters, who have already seen profits shrink this year due to the yen's strength.

The US dollar was largely unchanged at 98.13 after slipping earlier in the day.

In South Korea, negative economic indicators out of the US weighed heavily on every sector, analysts said. Samsung Electronics declined 4.6 per cent.

Hong Kong's Cathay Pacific plummeted over 14 per cent after the carrier, Asia's third largest, warned that full-year results would be 'disappointing' due to slumping revenue and losses from hedging its jet fuel costs.

Crude prices sank further. Light, sweet crude for December delivery was down 70 cents to US$64.60 (S$95.80) a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore.

The contract settled at US$65.30 overnight. Oil prices have fallen by about 56 per cent since peaking at US$147.27 a barrel in mid-July.

KUALA LUMPUR
Malaysian share prices closed 2.1 per cent lower on Thursday in moderate volume due to tumbles in New York and across Asia, dealers said.

The Kuala Lumpur Composite Index lost 19.29 points to close at 895.95.

HONG KONG
Hong Kong share prices closed 7.1 per cent lower on Thursday, tracking tumbles in regional markets on concern about the state of the US economy, dealers said.

The benchmark Hang Seng Index closed down 1,050.12 points at 13,790.04.

Turnover was light at 48.25 billion Hong Kong dollars (S$9.2 billion).

SHANGHAI
Chinese share prices closed down 2.44 per cent on Thursday tracking losses in regional markets amid renewed US recession fears, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed down 42.89 points to 1,717.72 on turnover of 27.1 billion yuan (S$4 billion).

The Shanghai A-share index fell 45.06 points, or 2.44 per cent, to 1,804.53 on turnover of 27.0 billion yuan, while the Shenzhen A-share index lost 8.23 points, or 1.66 per cent, to 486.56 on turnover of 10.5 billion yuan.

TOKYO
Japan's Nikkei stock index tumbled more than seven per cent in late trade on Thursday on growing worries about the outlook for the global economy.

The benchmark lost 685.97 points to 8,835.27.

The drop wiped out the gains seen a day earlier on hopes that US president-elect Barack Obama will get to work on fixing the world's largest economy in the face of the worst financial crisis in decades.

'Now that the event is over, investors are sobering up and looking at the economic gloom', said Mizuho Investors Securities broker Masatoshi Sato. -- AFP, THOMSON REUTERS, BERNAMA