Asia Stocks Sink Amid U.S. Recession Fear, Europe Debt Crisis

BANGKOK – Asian stock markets tumbled Friday amid fears the U.S. may be heading back into recession and Europe's debt crisis is worsening.

The sell-off in Asia follows the biggest one-day points decline on Wall Street since the 2008 financial crisis.

Oil prices extended sharp losses to near $86 a barrel in Asia amid expectations a slowing global economy will undermine demand for crude.

Japan's Nikkei 225 stock average slid 3.4 percent to 9,328.74 points and Hong Kong's Hang Seng dived 4.4 percent to 20,912.60. China's Shanghai Composite Index lost 2.1 percent to 2,626.80.

Investors fretted over the U.S. economic recovery ahead of Friday's release of crucial jobs figures for July, which often set the tone in markets for a week or two.

Many were also rattled by the lack of agreement in Europe about debt and how to stabilize the euro, said Tom Kaan of Louis Capital Markets in Hong Kong.

He said they also were watching to see whether the U.S. Federal Reserve launches a new stimulus effort.

"A lot of people will be trying to stay on the sidelines," Kaan said. "It's a general fear that is clouding the markets at the moment."

Elsewhere in Asia, South Korea's Kospi index shed 3.6 percent to 1,945 and Taiwan's benchmark skidded 4.4 percent to 7,952.98. Australia's benchmark dropped 4 percent to 4,103.10.

Investors, already fidgety after protracted bargaining to raise the U.S. debt limit and worries that Italy and Spain are getting deeply embroiled in Europe's debt crisis, searched for assets considered safer, such as gold.

"Stocks will continue to dive, especially in Euroland, where profits are disappointing analysts' estimates," said Carl B. Weinberg of High Frequency Economics in a report.

In Europe, most markets shed more than 3 percent Thursday. France's CAC-40 tumbled 3.9 percent, Germany's DAX lost 3.4 percent and Britain's FTSE 100 also shed 3.4 percent.

For the day, the Dow closed down 512.76 points, at 11,383.68. It was the steepest point decline since Dec. 1, 2008.

Thursday's decline was the ninth-worst by points for the Dow. In percentage terms, the decline of 4.3 percent does not rank among the worst. On Black Monday in 1987, for example, the Dow fell 22 percent.

In currency markets, the dollar edged down to 78.64 yen from late Thursday's 79.02 and the euro weakened slightly to $1.4100 from Thursday's $1.413.

On Thursday, Japan's government intervened in markets to weaken the yen against the dollar to support exporters. Finance Minister Yoshihiko Noda said authorities acted to protect the economic recovery following the March 11 earthquake and tsunami.

The dollar had fallen as low as 76.29 yen on Monday. It hit a record post-World War II low of 76.25 yen in the days following the March 11 earthquake and tsunami.

The intervention was coupled with monetary policy easing by the central bank's board.

Japan's moves came only a day after the Swiss National Bank intervened to slow a rise in the Swiss franc, another currency perceived as a save-haven at a time investors are fleeing risky assets such as shaky European government bonds.

Benchmark oil for September delivery was down 39 cents to $86.20 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $5.30 to settle at $86.63 on Thursday.