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Stocks fall amid new rescue moves Shares slide as fears intensify
(about 2 hours later)
The Bank of Japan has injected another 1.5 trillion yen ($14.4bn) into money markets, as Asian shares continued the global trend downwards. Asian stock markets spiralled lower in Thursday trading on fears that more companies could fall victim to the global financial crisis.
Tokyo's Nikkei average dropped 3.2% and South Korea's main stock index fell 3% in early trading on Thursday. Rescues of US insurance giant AIG and UK lender HBOS have failed to ease the fear gripping investors worldwide.
Analysts say brokers are not convinced by US efforts to stabilise markets with the $85bn bailout of insurers AIG. Tokyo's Nikkei share index dropped by 2% while Hong Kong's main stock index slid by 7%.
US stocks plunged more than 4% to a three-year low on Wednesday, while European markets also ended down. Analysts expect trading to continue to be rocky, with European markets also expected to continue to fall.
class="bodl" href="#graph">How big are these companies? Share indexes in Shanghai, Taiwan and India fell by between 3 and 5%.
The Japanese central bank's injection was the third consecutive day it had tried to shore up cash markets since the Nikkei hit a three-year low on Tuesday. Hong Kong's Hang Seng index dropped below the 17,000 mark and Australian shares closed 4% lower.
Across Asia, central banks have already pumped $33bn into money markets this week in an attempt to allay investors' concerns and ensure the supply of funds does not dry up. On Wednesday, the Dow Jones index of leading US stocks fell by more than 4%.
The financial markets continue to be hardest hit by the share slide, says the BBC's Chris Hogg in Tokyo, and it looks like traders are in for a white-knuckle ride over the next few hours. Flight to safety
Traders saw plummeting shares on Wall St on Wednesday Brokers in Japan say the markets are in freefall because investors fear the US government's efforts to stop the turmoil in the financial system are not working.
By 0400GMT, Hong Kong's Hang Seng had dipped below the 17,000 mark - a fall of 5% - Taiwan was down 4.5% and Australia had dropped 3.5%. As a result, investors are looking for safer places to put their money than stocks and shares.
Brokers in Japan say the markets are in freefall because investors fear the US government's efforts to stop the financial system's turmoil are not working. Traders saw plummeting shares on Wall Street on Wednesday
Consequently they are searching for safer places to put their money than stocks and shares, our correspondent says. The flight of investors from shares has taken the price of gold, traditionally seen as a haven in troubled times, to a 10-year high.
The flight of investors from shares has taken the price of gold to a 10-year high. Many Japanese institutions have assets insured by AIG, the insurance company that was rescued by the US government on Tuesday.
Many Japanese institutions have assets insured by AIG. And in Singapore, for the second day running, hundreds of AIG policyholders queued up outside its offices trying to surrender or cancel policies they fear could turn out to be worthless.
And in Singapore, for the second day running, hundreds of AIG policyholders queued up outside its offices trying to surrender or cancel policies they now fear could turn out to be worthless. Feverish speculation
Banking chaos The US Federal Reserve's AIG rescue package followed the collapse earlier this week of 150-year-old US investment bank Lehman Brothers, which sent shockwaves through the world's financial community and sparked a global share price plummet.
The Federal Reserve's AIG rescue package followed the collapse earlier this week of 158-year-old US investment bank Lehman Brothers, which sent shockwaves through the world's financial community and sparked a global share price plummet. Another investment bank, Merrill Lynch, has since been sold off to Bank of America. And in the UK, HBOS is being taken over by Lloyds TSB in a £12.2bn deal.
Another investment bank, Merrill Lynch, has since been sold off to Bank of America. There has also been feverish speculation about the future of two other leading US banks - Morgan Stanley and Washington Mutual.
The global financial crisis In pictures
And there has been feverish speculation about the future of two other leading US banks - Morgan Stanley and Washington Mutual.
The New York Times quoted unnamed sources as saying an auction for Washington Mutual was under way. The Wall Street Journal reported that both banking giant Citigroup and Wells Fargo had expressed an interest in a takeover.The New York Times quoted unnamed sources as saying an auction for Washington Mutual was under way. The Wall Street Journal reported that both banking giant Citigroup and Wells Fargo had expressed an interest in a takeover.
Meanwhile Reuters reported that Morgan Stanley, the second largest bank in the US which on Wednesday saw a quarter of its value wiped off its share price, had held preliminary takeover talks with Wachovia. Meanwhile the Reuters news agency reported that Morgan Stanley, the second largest US investment bank in the US which on Wednesday saw a quarter of its value wiped off its share price, had held preliminary takeover talks with Wachovia.
None of the companies involved has made any comment on the speculation and no negotiations can be confirmed.None of the companies involved has made any comment on the speculation and no negotiations can be confirmed.
The share-price of Goldman Sachs, the other surviving US investment giant, also fell on Wednesday, by 14%. Banks take action
The US Securities and Exchange Commission, meanwhile, said hedge funds and large investors would be required to disclose their short-trade positions, Reuters reported. The Bank of Japan has injected another 1.5 trillion yen ($14.4bn; £7.9bn) into money markets to help stabilise them. Australia took similar steps.
Rocky road The Japanese central bank's injection was the third consecutive day it had tried to shore up cash markets as the Nikkei trades at a three-year low.
The White House said the US Treasury was working to see if it could stem other losses, and defended the $85bn (£48bn) emergency loan for AIG. Across Asia, central banks have already pumped $33bn into money markets this week in an attempt to allay investors' concerns and ensure the supply of funds does not dry up.
White House spokeswoman Dana Perino said the US economy "has the strength to be able to deal with these shocks". But she added the government was still concerned about the stability of other big financial companies.
Despite the assurance, shares in AIG fell a further 45% to $2.05 on Wednesday.
Analysts say trading in general is likely to remain rocky amid concern that financial instability will continue.
Top UK mortgage lender HBOS had a rollercoaster ride on Wednesday before the news broke that it was to be taken over by Lloyds TSB in a £12bn merger.
In Russia, stock exchange trading was suspended on Wednesday following steep falls in shares.
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