Asian Stocks Drop Sharply on Bear Stearns News (AP) (17-03-2008)

SEOUL, South Korea (AP) -- Asian stocks plummeted and the dollar continued to sink on Monday following the surprise announcement by JPMorgan Chase that it is buying U.S. investment bank Bear Stearns.

Far from reassuring Asian investors the move suggested that other big American banks are facing serious troubles and sent regional markets down.

Japan's benchmark 225 index sank 3.7 percent to close at 11,787.51 points, its lowest in more than 2 1/2 years. In Seoul, the Korea Stock Price Index fell 1.6 percent to 1,574.44 after sagging as much as 3.9 percent.

Hong Kong's Hang Seng index was down 3.8 percent at 21,377.45 after plunging as much as 5.4 percent.

Banks were worst hit across the region as shares of Mitsubishi UFJ dropped 4.8% and Citigroup Inc. tumbled 8.1% in Tokyo, while National Australia Bank declined 2.9% and Australia & New Zealand Banking Group lost 4.9% in Sydney. HSBC Holdings sank 3.3% and Bank of East Asia shed 8.6% in Hong Kong, Kookmin Bank dropped 5.4% in Seoul and Icici Bank stock lost 6.4% in Mumbai.

In an extraordinarily rare weekend move, the Federal Reserve took bold action Sunday evening by cutting the discount rate, its lending rate to financial institutions, to 3.25 percent from 3.5 percent, effective immediately. The Fed also created another lending facility for big investment banks to secure short-term loans that would be available to big Wall Street firms on Monday.

Source: AP