Asian markets take another plunge amid recession fears

Major markets in Japan, Hong Kong, Australia and South Korea tumbled as already-fragile investor confidence was hammered by more weak US economic data and growing fears that Italy and Spain might need to be bailed out.

"It's going to be a very ugly end to an even uglier week," IG Markets analyst Ben Potter said in Sydney, adding that all sectors were expected to take a battering.

Tokyo dived 3.36 by the break, Hong Kong plummeted 4.67 percent, Sydney slumped 4.10 percent by noon, Seoul tumbled 3.62 percent and Taipei shed 5.15 percent. Shanghai slipped 1.80 percent.

Fear swept across Asia from Europe and the United States, where the Dow Jones Industrial Average suffered its worst one-day drop since December 2008 to close 4.3 percent lower at 11,383.68, erasing all this year's gains.

The broader S&P 500 dropped 4.8 percent to end the day at 1,200.07, while the tech-heavy Nasdaq Composite dived 5.1 percent to 2,556.39.

London's benchmark FTSE 100 index fell 3.43 percent, retreating to levels last seen in September 2010, while in Frankfurt the DAX fell 3.40 percent, and France's CAC 40 dropped 3.90 percent.

"We're seeing the erosion and now the loss of confidence, confidence in the economy, confidence in the market, confidence in the policy makers. It's all showing up," said US-based Hugh Johnson, of Hugh Johnson Advisors.

Weak jobs data out of the United States yesterday fuelled concerns among some analysts that the world could be heading towards another recession following the 2008 financial crisis.

The US Labor Department reported that weekly claims for unemployment benefits remained at a high 400,000 last week.

Eyes will be on the United States later today when Washington releases key government jobs data and a weaker-than-expected result could lead to a further sell-off.

In Europe, investor sentiment remained plagued by worries that debt-laden Italy and Spain could be engulfed by the fast-moving eurozone debt crisis.

The European Central Bank announced yesterday that it would resume emergency credit-easing measures, some of which were last enacted at the height of the financial crisis.

But the ECB's efforts still failed to restore confidence. The risk premium investors demand to buy Spanish 10-year bonds over safe-bet German debt shot back up to near a record high on Thursday.

The eurozone debt crisis has put Italy and Spain under huge pressure in recent weeks after Greece, Ireland and Portugal had to be bailed out by the European Union and the International Monetary Fund.