Stocks Fall in Asia after US Bailout Failure

Asian stock markets fell Tuesday as nervous investors reacted to the rejection of the bailout plan.

Japan's benchmark Nikkei stock 225 index slumped 4.12 per cent to close at 11,259.86 -- the lowest level since June 2005.

In Australia, the S&P/ASX-200 index shed 4.3 per cent after falling as much as 5.3 per cent.

Despite the turmoil, many indices erased early losses as trading progressed. Hong Kong's market made a dramatic turnaround, closing slightly higher than Monday's finish.

For now the calming words were having little effect, though several stock markets had come off their early lows: Japan's Nikkei 225 dropped 4.5% with Mitsubishi UFJ FG down 6.6% at Y876 and Mizuho FG falling 5.6%; exporter-related stocks were lower on the yen's rise with Sony down 6.5%, Canon down 4.7% and Honda Motor down 5.3%.

Korea's Kospi Composite had fallen 3.2% to 1410.20, briefly touching 1376.72; authorities announced a ban on short-selling until the end of the year, and greater flexibility for share buyback programs. Among heavyweights, Samsung Electronics was down 4.6% and Hyundai Heavy off by 4.8%.

Australia's S&P/ASX 200 was down 3.8% at 4624.20 after falling to 4540.70, having already dropped 2% Monday. Energy stocks were weak on a decline in global oil prices with Woodside down 5.8% and Santos down 5.1%%; miners were also falling with Rio Tinto down 8.8%, BHP down 7.2% and OZ Minerals off 7.9%.

New Zealand's NZX-50 was down 4.2%. AMN Amro Craigs investment adviser Nigel Scott said the fall should spur the Reserve Bank of New Zealand to deliver an inter-meeting rate cut; "it's a huge probability," he said.

Singapore's Straits Times Index was down 3.9% at 2268.23 after touching 2239.75; stocks in Manila had fallen 6.1% while the Malaysian market was 2.3% lower.

Taiwan's main index was down 6.2%, not far from a daily limit-down of 7%, with government-linked funds suspected buying.

Hong Kong's Hang Seng Index dropped 5.6%.