World markets endured another wild ride on Monday with Japanese stocks hitting a 26-year low on fears that emergency steps by world governments will be too late to prevent a global recession.
The fresh turmoil came despite a pledge by the Group of Seven major economies to cooperate to bring stability to the ailing financial system.
Japan's Nikkei index plunged 6.36 per cent by the close, hitting its lowest level since October 1982 before the economic bubble.
It was another grim day across most of Asia. Taipei stocks sank 4.65 per cent while Sydney finished with a loss of 1.6 percent. Manila reeled from a 12.3 per cent plunge while Hong Kong share prices were down nine per cent in afternoon trade.
"There is more pain left. The global turmoil does not appear to be resolving soon," said Atul Mehra, head of capital markets with brokerage J M Financial in Mumbai, where stocks dropped more than five per cent in the morning.
Bucking the trend, the Seoul market recovered from heavy early losses to end 0.8 per cent higher after South Korea's central bank cut its key interest rate by 75 basis points, its largest reduction yet.
The Group of Seven nations comprising Britain, Canada, France, Germany, Italy, Japan and the United States -- sought to calm nerves by affirming their "shared interest in a strong and stable international financial system."
"We continue to monitor markets closely and cooperate as appropriate," the statement from their finance ministers and central bank chiefs said.
At the same time, they voiced concern about "excessive volatility" in the value of the yen, which on Friday soared to a 13-year high against the dollar as worried investors fled to the relative safety of the Japanese currency.
But the G7 statement had only a fleeting impact on the market, which is waiting to see whether the rich nations' club will go so far as to launch joint market intervention to sell the yen.
The yen is unlikely to fall significantly unless the G7 takes "drastic steps such as intervention," said Kenichi Yumoto, vice head of forex trading at Societe Generale in Tokyo.
Japanese Prime Minister Taro Aso announced fresh measures to support the ailing stock market including a bigger government fund to pump capital into banks if needed.
His finance minister, Shoichi Nakagawa, voiced heightened concern about the surging yen, warning that "excessive" and "disorderly" currency movements were destabilising Asia's biggest economy.
"I will continue to watch currency markets with great interest," Nakagawa said.
The renewed turmoil came as the International Monetary Fund moved to bail out Ukraine and Hungary which have suffered badly in the turmoil.
US and European markets suffered heavy losses on Friday, with Wall Street's Dow Jones index ending down 3.59 per cent.
Markets expect fresh steps by global authorities this week to try to stabilise shaky markets. The US Federal Reserve is expected to cut interest rates on Wednesday from the current level of 1.5 per cent.
Investors are also waiting for Thursday's US gross domestic product figures for the third quarter, which are expected to show a contraction.
A slew of economic indicators and corporate results are also due this week in the United States, Europe and Japan, which analysts said were unlikely to give much cause for optimism.
"If the fall in markets has its origins in the fear of an international recession, then the coming week will be very bad," said Carl Weinberg at High Frequency Economics in New York.
"The economic calendar is full of indicators that will be uniformly atrocious."