Asian markets face turbulence in 2008: ratings agency

"2008 will be a more difficult year for stock market returns and we would not rule out the risk of a sharp correction," Lorraine Tan was quoted by AFP as saying in a statement accompanying a report by the agency's equity research unit.

Asian equity markets had reached increasingly risky levels and there would be less scope for them to rise after 2007's strong performance, the report added.

"Markets would be jittery over potential negative news, such as on inflation and further deterioration in the US and European economies," Tan said.

The comments came as major Asian markets dropped by between two and three percent early Thursday after an overnight slide on Wall Street caused by jitters about the outlook for the US economy.