Asian stocks tumbled on Thursday as fears that the world's biggest economies are shrinking sparked fresh panic, despite continued efforts by governments to ease the financial crisis.
Investors ignored signs that the banking sector crisis may be easing and focused instead on the risk of a global recession, which could slash company profits and lead to rising layoffs and weaker consumer spending.
"The economy is likely to slump in the next few quarters so corporate profits should be squeezed. The fundamentals are quite negative still," said Tomoko Fujii, head of economics and strategy at Bank of America in Tokyo.
Japan's Nikkei index tumbled more than seven percent at one point, hitting levels last seen in May 2003. At the lunch break it was down 5.5 per cent.
Sydney was 4.3 per cent lower. Hong Kong stocks opened with a loss of 4.7 per cent and Singapore shed 4.1. Worst hit was Seoul, which was down 9.0 per cent in morning trade.
"Escalating concern about a global recession has prompted investors to bail out of growth sensitive assets," said NAB Capital analyst Robert Henderson.
While the outlook for the major economies is hardly rosy, "the picture is even uglier for emerging economies," he warned.
Stocks dived more than 10 percent on the Argentine and Brazilian markets on Wednesday.
The White House announced it would host a summit of the leaders of the Group of 20 rich and emerging nations on November 15 to try to coordinate efforts to counter the worst financial crisis since the Great Depression in the 1930s.
US stocks plummeted on Wednesday on global recession worries, grim corporate outlooks and falling oil prices.
The Dow Jones Industrial Average lost 5.69 per cent while the broad-market Standard and Poor's 500 slid 6.10 per cent to a five-year low.
European markets also fell heavily as a blunt recession warning from British Prime Minister Gordon Brown cast a shadow over trading.
"We must now take action on the global financial recession which is likely to cause recession in America, France, Italy, Germany, Japan and -- because no country can insulate itself from it -- Britain too," Brown told parliament.
His comments echoed Bank of England governor Mervyn King who warned a day earlier that Britain was "likely" entering a recession -- which is usually defined as two successive quarters of negative economic growth.
The London FTSE fell 4.46 per cent, the Paris CAC 40 plunged 5.10 per cent and Frankfurt's Dax dropped 4.46 per cent.
In Japan, data showed the country's trade surplus plunged 94 percent in September from a year earlier, adding to fears that its export-led recovery from recession in the 1990s has ground to a halt.
But the yen remained supported as investors continued to unwind risky bets. The dollar slipped to 97.66 yen, down from 97.79 in New York late on Wednesday.
The euro lost further ground as traders braced for interest rate cuts by the European Central Bank to try to spur economic growth.
The euro was at 1.2830 dollars, down from 1.2867 in New York and close to a two-year low. The euro slipped to 125.27 yen from 125.82.