SINGAPORE - Asian markets were in full retreat on Wednesday (Jan 20) morning, sparked off by rising worries over plunging oil prices and continued fears over a Chinese slowdown.

The twin terrors sent regional markets plunging at midday trading, with the benchmarket Straits Times Index down by 2.5 per cent, or 67 points, wiping out Tuesday's gains.

The STI is now down 27 per cent since its last high in June last year, entering what analysts say is a "bear market".

The STI, at the 2,570 point level, is also at its lowest since the depths of the financial crisis in 2009, when the STI was at about 1,749 points.

Oil and gas stocks took a major beating, with Ezra diving 14.28 per cent to just 6 cents, while Keppel Corp was down 5.4 per cent to $4.90.

SembCorp Marine was up 4 per cent on rumours that its parent SembCorp Industries was mulling over a takeover bid for the company. SembCorp Industries, however, fell 6.29 per cent to $2.38.

Local banks also did not fare much better.

UOB was down 44 cents, or 2.5 per cent to $17.080, while OCBC and DBS also fell further. OCBC was down 2.3 per cent to $7.73, while DBS shed 35 cents, or 2.4 per cent, to $14.130.

On Wednesday night, the International Energy Agency warned that oil prices could diver further, despite oil prices falling to 13 year lows.

"While the pace of stockbuilding eases in the second half of the year as supply from non-Opec producers falls, unless something changes, the oil market could drown in oversupply," the IEA said.

Brent crude oil dropped to a 13-year low of less than US$28 a barrel on Monday after Iran's liberation from sanctions left it free to return to the export market.

Chinese growth data on Tuesday also pointed to a slowdown in the second largest economy.

Elsewhere, the Nikkei was down 2.65 per cent to 16622.61 points, while Hong Kong also fell by 3.32 per cent to 18983.80.