TOKYO (CBS/AP) -- Asian stocks plunged on Monday, dragged down by last week's decline on Wall Street and on the yen's strength against the U.S. Dollar.
Traders pinned hopes on bargain-hunting to buoy markets later in the day.
Japan's benchmark Nikkei 225 stock index lost 3.20 percent to 16,277.10 points on the Tokyo Stock Exchange by the close of morning trade on Monday.
It was the same story in other markets - Seoul, Hong Kong, Australia - all of them reacting to the sharp fall of the U.S. Dow.
CBS News correspondent Barry Peterson, reporting from Tokyo, said, "I think there's ongoing concern across Asia that the U.S. market is weakening - because of housing problems, because of subprime mortgage problems and perhaps because the U.S. economy may be slowing down. So investors, we are told, are trying to get out from under their global positions - one more reason for the sell-off.
"The markets here are really sensitive to what's happening with the Dow, what's happening with the world's largest economy, the United States," Peterson said.
In Hong Kong the blue chip Hang Seng Index fell 2.5 per cent to 28,720.83 in the morning session, making up some losses after it opened down 3.5 percent at 28,427.99 in heavy trade.
Analysts said the slight rebound was due to bargain-hunting by investors looking to buy back into the market, after selling out when the index hit a record 30-thousand last Thursday.
Francis Lun Sheung-lim, General Manager of Fulbright Securities Limited, said the loss was not significant and the market, underpinned by the strength of the Chinese economy, was strong.
"I think investors are confident enough that the market will regain all the lost ground, if not today, then tomorrow. This is only a small adjustment. It's nothing to worry about. There's certainly no panic in the market," he added.
He forecast that the market would return to the 29,000 mark during the week and could reach the 30,000 mark.
Hong Kong financial markets were closed on Friday for a public holiday.
In Seoul, the Korea Composite Stock Price Index was down 3.8 percent at 1895.25 by midday.
Earlier in the session the Kospi fell as much as 4.8 percent before paring losses.
Stocks were also down in Australia, Hong Kong, Indonesia, the Philippines and Taiwan.
"There have been worries that the United States would face an economic slump, and also oil prices have continued to soar," analyst Lee Young-gon, told AP Television on Monday.
"In this situation, investor sentiments are hurt," he added.
Philippine shares also plummeted on Monday as jittery investors cashed out after last week's deadly blast in Manila's financial district and Wall Street's heavy losses.
The 30-company Philippine Stock Exchange Index fell 151.9 points, or 4 percent, to end at 3,667.87, its lowest level in three weeks.
"What happened last Friday at the Glorieta shook the confidence of some of the investors and of course in the States it went down 365 points last Friday," Philippine Stock Exchange trader, Alejandro Yu, told AP Television.
Losers swamped gainers 144 to 5, while 19 stocks were unchanged.
Philippine Long Distance Telephone Company was the most actively traded stock, falling 3.1 percent to 3,015 pesos.
Conglomerate Ayala Corporation dropped 5.2 percent to 550 pesos. Ayala Land Incorporated, the owner of a Manila mall where an explosion killed eight people Friday and injured more than 100, declined 4.4 percent to 16.25 pesos.
Authorities were investigating the blast and have not ruled out an accident.
The Asian markets took their cue from Wall Street, where the Dow Jones industrial average lost 2.64 percent to 13,522.02 on Friday, as lackluster corporate earnings, renewed credit concerns and rising oil prices spooked investors.
The Dow was down for the fifth straight session and was off 4.05 percent for the week.
Commodity and financial issues led the declines in Tokyo; the Topix was down in all 33 sub-sectors were down, as losers outpaced gainers 1,611 to 76.
The Japanese are particularly worried because the dollar has now lost a lot of its value. That means the yen is stronger and that means Japanese goods will cost more to export. And that will cut into the sale of Japanese goods - another reason why this market is taking a hit.
"Japan especially is a big trading partner," Peterson said, "and trade goes in both directions. So bad news on the Dow often (and at this point once again) translates into some pretty bad news on the Tokyo exchange. "
The U.S. dollar was trading at 113.34 yen at 0850 on Monday (2350 GMT Sunday), down from 114.80 yen late on Friday in New York.
Among South Korean shares, Hyundai Heavy Industries Company, the world's biggest shipbuilder, fell 5.9 percent.
Posted by LS