Asian stocks dropped and safe-haven government bonds rose today after shares plunged on Wall Street and oil prices shot above $140 a barrel, aggravating investors' fears of high inflation and slowing economic growth.
Japan's Japan's Nikkei stock average slipped 2 per cent to a two-month closing low today in its longest losing streak in seven months, with Sony Corp and other exporters battered by growing uncertainty over the US economy, high oil prices and sharp Wall Street losses.
Sumitomo Mitsui Financial Group and other banks slid after Goldman Sachs warned of more write-downs in their US peers, urging investors to sell US bank and automotive shares - a move that intensified concern about the outlook for profits and sent the Dow to a 21-month low.
Consumer lenders extended a tumble sparked in part by a report earlier this week by Lehman Brothers that Aiful Corp was "arguably insolvent" on a parent basis and may not have the support of its main bank. Aiful said its finances were sound and that it may take legal action against Lehman Brothers for the report.
Market players said that despite the lineup of bad factors, the real culprit behind the US slide - and, consequently, those of other world markets - was increasing uncertainty.
"It's as if everybody's seen a ghost. The selling in the US could be due to anything at this point," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"Once we know the reason behind it, people will settle down."
The benchmark Nikkei slid to 13,544.36, its lowest close since April 24th. It lost 2.9 per cent on the week, the worst in two weeks, while its seven straight losing sessions is the worst since last November.
The broader Topix was down 1.8 per cent at 1,320.68.