Asian shares slide after Dow's plunge

Markets across Asia slumped Friday, tracking losses on Wall Street overnight as investors worried about a possible end to U.S. interest rate cuts and a slowing American economy — a vital market for Asia exporters.

Hong Kong's benchmark index plunged over 3 percent and markets in Japan, China, South Korea and Singapore fell more than 2 percent.

Repeating a pattern seen several times this year, a sharp sell-off in U.S. stocks prompted investors to dump shares in Asian markets, many of which have surged to records in recent weeks. The Dow Jones industrial average tumbled more than 360 points Thursday as investors reacted nervously to surging oil prices and a U.S. Federal Reserve warning on inflation.

The warning from the Fed, which cut interest rates earlier this week, triggered concern that it might hold off on further rate cuts or even consider raising them if inflation accelerates, renewing worries about a slowdown in the U.S. economy.

"I'm not expecting a serious sell-off, but I think Asian markets are responding to a genuine in the overall outlook — that the Fed is not going to be as aggressive in cutting rates," said Tim Rocks, Asia Strategist at Macquarie Bank in Hong Kong.

"But you'll certainly see a slower pace in gains," Rocks said. "The Fed's attitude is going to put a lid on markets."

Japan's benchmark Nikkei 225 index tumbled 352.92 points, or 2.1 percent, to finish at 16,517.48 points, dragged down by financial shares. Mitsubishi UFJ Financial Group dropped 6 percent following a recent revision of its profit outlook on weak domestic lending, while Mizuho Financial Group fell 5.7 percent.

Jitters over the fallout from the U.S. subprime mortgage crisis will linger for awhile, traders said, and investors were anxiously awaiting U.S. jobless data due out later Friday for more clues about the state of the U.S. economy.

In Hong Kong, the blue chip Hang Seng Index — which had soared nearly 60 percent since the start of the year — sank 1,024.54 points, or 3.25 percent, to close at 30,468.34.

Hong Kong's stock market has surged amid investor demand for shares in mainland Chinese companies and on signs that Beijing plans to allow individual investors from the mainland to buy shares in Hong Kong stocks at some future date.

The stunning ascent this year in many Asian markets has been punctuated by occasional drops, usually sparked by plunges on Wall Street, which seem to be taken as cues to unload shares that may have risen too high, too quickly.

So far this year, each time Asian markets have dropped sharply, most have quickly bounced back and climbed higher.

Elsewhere Friday, he benchmark Shanghai Composite Index fell 2.3 percent, or 136.47 points, to 5,777.81, while Taiwan's weighted index fell 3.4 percent to 9,273.09.

Singapore's Straits Times index was down 2.5 percent to 3,709, while the Korea Composite Stock Price Index, or Kospi, fell 2.1 percent to close at 2,019.34.