Asian markets tumble with Wall Street as subprime fears resurface -

Stock markets across Asia tumbled Thursday, sending major indices down more than 2.5 pct, after Wall Street suffered its fifth-biggest point decline of the year as the dollar hit fresh record lows against the euro and GM reported its biggest-ever quarterly loss.

Adding to the gloom, Morgan Stanley (NYSE:MS) (NASDAQ:MNDX) announced 3.7 bln usd in writedowns on subprime-related securities, and the big mortgage lender Washington Mutual (NYSE:WM) warned that its 2007 credit losses could be as high as 2.9 bln usd. That's almost double the amount estimated back in July when the subprime crisis was at its peak.

The greenback sank to fresh record lows against the euro on speculation that China might diversify its foreign exchange reserves beyond the dollar and into the euro and other strong currencies.

'It is a very negative day out there after the bad news out of the US as well as China considering selling off the dollar,' said Juliana Roadley, equities analyst at Commsec in Sydney. The US 'doesn't look very good,' she said.

The Sydney, Shanghai and Hong Kong were among markets that took the worst hit.

The Hang Seng closed down 3.2 pct at 28,760.22 and the Taiex fell 3.9 pct to 8,937.58.

The Shanghai Composite ended down 4.9 pct at 5,330.02. The KOSPI index closed down 3.1 pct at 1,979.56.

The S&P/ASX 200 was down 2.6 pct at 6,521.6 and the All Ordinaries was off 2.4 pct to 6,568.5 as resource giants BHP Billiton Ltd (NYSE:BHP) and Rio Tinto Ltd fell as oil prices pulled back from record levels.

The Australian market has rallied more than 15 pct from August 17 when the credit crisis sent shock waves through international financial markets.

'We had a very weak night in New York and that's flowed onto here. The credit crunch is haunting us again,' said Marcus Mueller, a director at Reynolds & Co.

'Nearly everybody agrees that we've had a hell of a party and maybe need a 'dust settling' period. The question is if we're going to have some sort of crisis,' Mueller said.

Crude for December delivery closed down 33 cents at 96.37 usd a barrel on the New York Mercantile Exchange, easing from a record of 96.70 usd after the US government reported a bigger-than-expected build in inventories in the latest week.

The contract dropped 1.05 usd to 95.32 usd a barrel in Asian trade although analysts said it could still march toward the 100-dollar level due to tight global supplies and strong demand.

'There is still a lot of momentum at the moment, so there is potential for it to push through 100 dollars,' said Mark Pervan, a commodity strategist with Australia's ANZ Bank.

Meanwhile, Roadley said not even gold stocks could escape the selloff even though the price of gold rose to fresh 27-year highs overnight.

Financials were also hit hard even though most banks in Asia and Australia have limited exposure to the US subprime sector and few have large holdings of securities that include subprime debt.

The Financial Times reported Thursday that writeoffs in the US may reach as much as 70 bln usd, about 40 bln usd more than banks have booked so far.

'Investors will remain skittish -- the credit crisis in the US remains and keeps getting worse,' said Astro del Castillo, managing director of First Grade Holdings in Manila.

The Philippines Composite ended down 2.5 pct at 3,692.10. The Jakarta index closed down 1.3 pct at 2,678.22.

The Nikkei 225 lost 2 pct to 15,771.57, its lowest since September 10. The broader Topix was down 2.6 pct to 1,516.94.

The Singapore and Malaysian markets were closed for a public holiday.

GM takes hit
The Dow Jones Industrial Average closed down 361 points, or 2.6 pct, overnight after General Motors Corp (NYSE:GM) said it had a third-quarter loss of 39 bln usd, mostly due to an accounting change. But the company also said earnings at its core North American market were weak and said its finance arm is struggling, sending its shares down 6 pct.

Morgan Stanley reported late Wednesday that it was taking another 3.7 bln usd writedown on subprime-related securities. The brokerage had a full 12.3 bln usd in exposure at the end of August.

'There's nobody willing to buy (stocks) as it looks like the US is heading for another fall. That's the state of play,'after Morgan Stanley's disclosure, said Ric Klusman, head of institutional trading at Aequs Securities in Sydney.

Among individual stocks, BHP Billiton was off 3.6 pct to 43.24 aud and Rio Tinto was up 1.1 pct at 113.40 aud.

In Hong Kong, Bank of China, which has the biggest exposure to subprime-related securities among Chinese lenders, fell 3.1 pct to 4.63 hkd.

China Construction Bank (OOTC:CICHF) , the third-biggest bank by assets in China, lost 3.4 pct to 7.76 hkd.

HSBC Holdings, Europe's largest bank, fell 1.9 pct to 142.40 hkd.

Stock market operator Hong Kong Exchanges and Clearing Ltd was down 3.5 pct at 245.4 hkd.

PetroChina, Asia's biggest oil and gas company, was down 7.4 pct at 16.0 hkd.

In Japan, oil stocks led the decliners after a profit warning by Nippon Mining. Nippon Mining plunged 13.9 pct to 914 yen. The holding company for oil refiner Japan Energy and non-ferrous metals producer Nippon Mining & Metals said its profit margin narrowed in the fiscal first half as it failed to keep pace with crude oil price rises by raising product prices.

'The company's share price reacted to its weak petroleum processing business. It was dragged down further by the weak sentiment in the stock market overall,' said Yoshihisa Miyamoto, research analyst at Okasan Securities.

Among other oil stocks, Nippon Oil lost 4 pct at 942 yen, Cosmo Oil fell 3 pct to 482 yen and Showa Shell Sekiyu dropped 1.4 pct to 1,301 yen.

Toyota Motor (NYSE:TM) shares fell 4.2 pct to 6,170 yen. Toyota said Wednesday its operating profit grew 16.3 pct in the first half as strong overseas sales of key models and the weak yen offset rises in expansion and procurement costs, allowing it to hike full year profit forecasts.

Honda Motor plunged 2.9 pct to 4,000 yen while Nissan Motor shed 2.5 pct to 1,228 yen.

In the financial sector, Mitsubishi UFJ Financial Group (NYSE:MTU) lost 3.2 pct to 966 yen, while Mizuho Financial Group (NYSE:MFG) fell 3.4 pct to 563,000 yen.