Worries about the fate of US bond insurers also contributed to the sell-offs, despite talk of various rescue plans, after Standard & Poor's on Tuesday warned the ratings of US banks could be at risk.

Tokyo's benchmark Nikkei index fell 4 per cent, while Hong Kong opened 5.4 per cent lower and Singapore slumped 3.9 per cent. The MSCI's measure of Asian stocks excluding Japan fell 1 per cent as of 9.30am Singapore time.

'It cannot be helped. The market is being hit by US recession fears,' said Mr Yoshihiro Ito at Okasan Capital Management in Tokyo.

'The impact of subprime (mortgage) problems is spreading into the broader US economy,' Mr Ito added.

The vast US services sector unexpectedly retrenched to recessionary levels in January, data on Tuesday showed, while euro zone services growth slowed to a near-halt, casting doubts about the outlook for Asian exports.

KUALA LUMPUR
Malaysian share prices fell 1.2 per cent on Wednesday in line with regional bourses following steep losses on Wall Street, dealers said.

The Kuala Lumpur Composite Index (KLCI) ended down 16.41 points at 1,415.94, off a low of 1,408.55.

HONG KONG
Hong Kong stocks fell 5.4 per cent in a half-day trading session on Wednesday, the biggest single day percentage fall in just over 2 weeks, as investors tracked sharp losses in overseas markets and cashed out of the market ahead of the Lunar New Year break.

The benchmark Hang Seng Index had fallen as much as 6.15 per cent to 23,283.97 before finishing at 23,469.46, down 1,339.24 points.

The China Enterprises index of H-shares, or Hong Kong-listed shares in mainland companies, plunged 6.93 per cent.

The Hong Kong market closed after the morning session for the Lunar New Year holidays. It reopens on Monday.

SHANGHAI
The China market is closed today for the Lunar New Year holidays.

TOKYO
Japanese share prices plunged 4.70 per cent by the close of trade on Wednesday after heavy losses on Wall Street sparked by growing fears of a recession in the United States, dealers said.

They said that a surprise contraction in the giant US service sector triggered concerns that the world's largest economy may be in even worse condition than previously feared.

The Tokyo Stock Exchange's benchmark Nikkei index lost 646.26 points to end at 13,099.24. -- AFP, AP, REUTERS