SINGAPORE - Singapore's benchmark share index fell through the key psychological support level of 3,000 after trading opened on Friday (Aug 21).

The Singapore market is caught in a global sell-off in equities that hit Wall Street overnight as concerns about the health of the world economy snowballed.

By 10:20am, the Straits Times Index was down 55.55 points or 1.85 per cent to 2,954.23.

Singapore and other Asian markets were also hit by news out on Friday morning that China's factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, adding to worries that the world's second-largest economy may be slowing sharply.

Tokyo shares fell 2.02 per cent while Seoul lost 1.59 per cent and Sydney dropped 0.99 per cent. Shanghai lost 1.03 per cent and Hong Kong fell 1.96 per cent, continuing a slump that has brought the index to the brink of a bear market after dropping some 20 per cent from its April peak.

"The overnight weakness in global markets is making people nervous," Angus Gluskie, managing director at White Funds Management in Sydney, told Bloomberg News. "The biggest concern among investors right now is the market volatility in China that shows investors are increasingly concerned about the health of the Chinese economy and how that might impact the rest of the world."

US shares sank more than 2.0 per cent on Thursday, with the Dow dropping to its lowest level for 2015 as worries spread about the strength of the world economy.

Gold gained as investors looked for safer bets, rising to US$1,159.00 in Asia compared to US$1,138.80 late Thursday.