HONG KONG , Aug 9, 2011 (AFP) - Asian stock markets spiralled downwards on Tuesday, deepening sharp losses over the previous two sessions brought on by the historic US credit downgrade and the debt crisis in Europe.
As gold soared to record levels and crude oil prices fell, Asian stocks plunged despite G7 and G20 pledges to bolster the global economy and European Central Bank action on eurozone debt.
Tokyo dived 4.43 percent by the break, Hong Kong lost 7.24 percent in the first few minutes, Sydney shed 4.91 percent and Seoul was 7.5 percent down while Taipei was more than five percent down.
Shanghai was down 2.51 percent.
New Zealand, the first in the Asia-Pacific to open, dropped 3.70 percent.
"It's a horrible place to be, dark days are upon us," said IG Markets institutional dealer Chris Weston from Melbourne. "How much further to fall is the question people are asking.
"People are trading on emotions at the moment rather than looking at the rational situation. There's widespread panic."
Fear continued to dominate after the unprecedented downgrade of the United States by Standard & Poor's on Friday and a warning from the head of the European Commission Thursday that the debt crisis in the eurozone had likely spilt over into other economies.
With the US Federal Reserve board meeting later Tuesday, analysts hope any fresh policy decision will stem the global turmoil, which saw markets plummet around the world on Friday and Monday.
"S&P's downgrade of the US credit rating is yet another demand from Wall Street for QE3 (quantitative easing), which their own private bank, the Federal Reserve, will no doubt deliver shortly," said a fund manager at Grand Private Equities Wesley Legrand.
Asian stocks had been expected to open lower after Wall Street suffered its steepest one-day drop since late 2008 on Monday, with the Dow Jones Industrial Average falling 5.55 percent, while the broader S&P 500 fell 6.7 percent and the tech-heavy Nasdaq dived 6.9 percent.
Those losses were accompanied by a similar sell-off elsewhere, with Frankfurt down more than 5.0 percent, Paris down 4.7 percent and London diving nearly 3.4 percent.
Gold, viewed as a safe haven in financial turmoil, jumped to a record high $1,726.30-$1,727.30 on opening in Hong Kong.
The euro bought $1.4191 in early Asian trade on Tuesday, almost flat from $1.4179 in New York late Monday, while it eased to 109.74 yen from 110.27.
The dollar stayed weak against the Japanese currency, trading at 77.31 yen against 77.68 yen in New York.
The debt fears also weighed on the Australian dollar, which hit 100.42 US cents in early trade, down from 103.55 cents on Monday.
Oil markets saw heavy selling. Brent North Sea crude sank under $100 a barrel in Asian trade, with the September contract slipping $3.83, or 3.69 percent, to $99.91.
New York's main contract, light sweet crude for delivery in September, fell $5.23, or 6.43 percent, to $76.08 per barrel.