World markets fell Friday in the wake of another plunge on Wall Street amid doubts that Washington's bank bailout plan will prevent a recession in the U.S. and an economic slump around the world.
Dismal data on the U.S. economy -- a vital export market -- helped send Japan's benchmark Nikkei 225 stock average skidding 216.62 points, or 1.9%, to 10,938.14, the lowest since May 18, 2005.
Virtually all Asian markets were in the red. Hong Kong's Hang Seng index slid 2.9% to 17,682.40, while key indices in Australia, Singapore, India, Malaysia and Thailand also fell. Only Taiwan bucked the regional trend and edged higher.
European markets opened modestly lower, with Britain's FTSE 100 down 0.5% and Germany's DAX down 0.3%.
Investors seemed unenthused about the possible passage later Friday of a $700 billion bank rescue plan aimed at stabilizing the U.S. financial system. A revised version of the bailout bill was passed Wednesday by the U.S. Senate and the House of Representatives was expected to vote on the package Friday, but approval was far from assured.
Still, even if the package passes, investors are pessimistic about the outlook for the U.S. economy -- a vital export market -- and realize that cleaning up the bad debt mess at the core of the global credit crisis will take a long time.
"The bailout could move us toward a solution, but there are many unresolved issues," said Tim Rocks, Asia strategist at Macquarie Securities in Hong Kong. "We're starting to see the first evidence that the U.S. economy is starting to suffer, and this will have an impact on Asia exports through next year."
Wall Street took a dive Thursday as numbers from the U.S. Labor Department showed that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, a seven-year high and significantly above analysts' estimates of 475,000.
Also, the Commerce Department said that U.S. factory orders in August dropped 4% compared to July, a much steeper decline than the 2.5% drop analysts expected and the biggest setback in nearly two years.
Japanese automakers sank for a second day Friday after the industry reported September sales plunged in the U.S. -- their biggest overseas market.
Shares of Toyota Motor Corp. fell 5.3% after it said Wednesday that U.S. monthly sales fell 32%. Nissan Motor Co. tumbled 7% and Honda Motor Co. fell 5.5%.
"It is clear the U.S. auto market, for one, is expected to stay sluggish," said Noritsugu Hirakawa, strategist at Okasan Securities Co. in Tokyo.
Other decliners included Nintendo, maker of the hit "Wii" home computer game, which sank 7%, and Kyocera, down 3.4%.
Rocks of Macquarie Securities said he expects Asian technology, shipping and steel industries to struggle as U.S. consumer demand for Asian exports weakens.
"All the big export sectors are the most at risk," he said. "This is not a good scenario any way you look at it for Asia for next year."
On Thursday, the Dow Jones industrial average fell 348.22, or 3.22%, to 10,482.85. U.S. stock market futures were up modestly, suggesting Wall Street would open slightly higher.
The dollar edged up to 105.16 yen from 104.97 late Thursday in New York. The euro climbed to $1.3862.
Oil prices dipped after tumbling in New York trading. Light, sweet crude for November delivery was down 65 cents to $93.62 a barrel in electronic trading on the New York Mercantile Exchange.
Markets in mainland China, South Korea and Indonesia were closed for national holidays.
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