HONG KONG (AFP) — Asian stock markets slid on Wednesday as a global rally eased amid continued fears of recession in the world's biggest economies.
Traders took their lead from a fall on Wall Street, which came despite a pledge by the US government to spend 250 billion dollars shoring up banks to get money markets moving again.
Hong Kong led the falls, shedding five percent, after two days of regional gains caused by the announcement of a global effort to put a stop to the worst financial crisis since the 1930s Great Depression.
"All the good news has now come out," said Masatoshi Sato, a broker at Mizuho Investors Securities. "Attention has now shifted to the real economy."
However, Tokyo managed to edge up more than one percent a day after its record 14 percent surge.
As dealers took profits following the advances of Monday and Tuesday, Sydney slid 0.8 percent, Taipei lost 0.86 percent, Seoul shed two percent and Shanghai was 1.12 percent off. Singapore lost 3.24 percent.
"We had a couple of good days and it's not surprising to see some profit-taking," said Nomura Australia markets strategist Eric Betts.
The fall in Hong Kong came despite the government saying it would guarantee all bank deposits in the city for the next two years.
But despite the general concern for the world economy there was enough confidence in Tokyo that the central bank drained the money markets of 2.8 trillion yen (27.6 billion dollars) after 19 straight days of pumping in money.
Stocks took their cue from Wall Street, where the Dow Jones retreated 0.82 percent on Tuesday, shedding early gains.
On Monday, the index registered its biggest points rise in history and its biggest rally in percentage terms since 1933.
Meanwhile Janet Yellen, the head of the San Francisco branch of the Federal Reserve, said the US economy appeared to already be in a recession, usually defined as at least two quarters of economic contraction.
Her comments came after Washington announced its package to help the banking industry. Nine large banks including Citigroup, JPMorgan Chase and Goldman Sachs agreed to give the government equity stakes in exchange for new capital, under the plan.
While panic selling on global markets has subsided for now, there are still deep concerns about the outlook for the US and global economies.
"The US government's bailout plan is not going to get the economy back on its feet anytime soon," warned analysts at investment bank Calyon.
"Markets will increasingly brace for a long and deep recession in the US and a recession to varying degrees globally."
Elsewhere in Asia Manila closed 1.55 percent lower, Wellington was 1.5 percent down and Kuala Lumpur was 1.7 percent off and Jakarta ended 2.3 percent off.
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