Sept. 18 (Bloomberg) -- Asian stocks tumbled, pushing the region's benchmark index to the lowest level in three years, as credit markets seized up and concerns grew that more financial companies will collapse.
Macquarie Group Ltd., Australia's largest investment bank, plunged by a record 23 percent as Morgan Stanley and HBOS Plc sought buyers. Newcrest Mining Ltd. rose as gold extended its biggest jump in 26 years. U.S. three-month Treasury yields traded near the lowest since World War II as investors fled stocks for safer havens.
``Confidence has been shattered,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $108 billion. ``The market is worried about a domino effect in the financial sector, with no one sure who's going to fall next.''
The MSCI Asia Pacific Index dropped 1.7 percent to 108.74 as of 7:39 p.m. in Tokyo, the lowest since Sept. 16, 2005. The index trimmed an earlier 4.3 percent drop after the Federal Reserve, the European Central Bank and the Bank of Japan moved to pump dollars into the financial system. Hong Kong's Hang Seng Index rallied from a 7.7 percent loss to close little changed.
Most benchmark indexes in the region fell. Japan's Nikkei 225 Stock Average lost 2.2 percent to 11,489.30, led by Sony Corp. after Goldman Sachs Group Inc. cut its recommendation.. Taiwan's Taiex index lost 2.7 percent, prompting the government to announce it may buy shares to help prop up the market.
Bank Takeovers
Today's central bank action, which was announced after Japanese and South Korean markets closed, is aimed at heading off the credit crisis that has caused Lehman Brothers Holdings Inc.'s bankruptcy and the takeover of American International Group Inc. by the U.S. government.
Futures on the Standard & Poor's 500 Index rose 1.4 percent in after-hours trading. U.S. stocks slumped to the lowest in three years yesterday, with the Standard & Poor's 500 Index sliding 4.7 percent.
More than $19 trillion has been wiped off global stock market value since a high on Oct. 31 as the worst U.S. housing recession since the Great Depression and a resulting global credit crisis slowed the world economy.
Morgan Stanley, the investment house that fell by a record yesterday, started weighing a merger with Wachovia Corp., according to people familiar with the matter. Lloyds TSB Group Plc agreed to buy HBOS, the No. 1 mortgage lender in Britain which has been faced with a shortage of funds.
Exuberance Over
Macquarie slid 23 percent to A$26.05, taking its loss from a high in May 2007 to 73 percent. Babcock & Brown Ltd., Australia's second-biggest investment bank, lost 17 percent to 76 cents. Babcock has plunged 97 percent this year, making it the third- largest loser in 2008 on the MSCI World Index behind Fannie Mae and Freddie Mac.
In a sign that banks have lost confidence in the solvency of their competitors, the London interbank offered rate, or Libor, rose 19 basis points to 3.06 percent yesterday, the biggest advance since Sept. 29, 1999. Corporate bond default risk indexes rose to records in the Asia-Pacific region today.
The perceived risk of U.S. government debt, long held to be absent of any default risk, also climbed to a record yesterday as the government's involvement in bailing out financial markets weighed on its own balance sheet.
Unprecedented
Sumitomo Mitsui Financial Group Inc., Japan's No. 3 listed bank, slumped 6.6 percent to 582,000 yen. HSBC Holdings Plc, which CNBC reported as being a possible bidder for Morgan Stanley, lost 0.2 percent to HK$114.90. The stock trimmed an earlier 7.6 percent slump.
``People want to avoid any type of risk,'' said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., with $54.6 billion in assets. ``I've never seen this kind of crisis before,'' said Okumoto, who has been in the financial-services industry for 23 years.
U.S. Treasury three-month bill rates were 0.071 percent as of 11:58 a.m. in Tokyo. They dropped 65 basis points yesterday to close at 0.04 percent, a level not seen since 1940. Two-year yields were 1.65 percent, near the lowest since April.
Newcrest, Australia's largest gold producer climbed 15 percent to A$24.50, the biggest gain since September 1999, after the price of gold surged the most in 26 years and silver rose the most since 1979 yesterday. Lihir Gold Ltd. jumped 16 percent to A$2.48. Zijin Mining Group Co., China's largest gold miner by market value, rallied 21 percent to HK$3.90.
Sony, the maker of the PlayStation 3 game console, lost 8.7 percent to 3,270 yen, the steepest fall since April 28, 2003. Goldman's Yuji Fujimori cut his rating on the company, citing rising risks for the company's mobile phone, television and digital camera divisions.
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