TOKYO (AFP) - Prospects for Japan's export-driven economy turned gloomier on Monday on news that worldwide demand for Japanese goods dried up in January, sending the Tokyo stock market to a 26-year low point. The Nikkei stock index, which already has shed 20 percent of its value this year, plunged 1.21 percent to 7,086.03, its lowest reading since October 6, 1982. Share prices elsewhere in Asia also fell sharply after Japan announced its first current account deficit for more than a decade. The Kong Kong market shed 4.8 percent, Shanghai fell 3.39 percent and in Singapore shares gave up 3.71 percent to close at a six-year low. Renewed concern over prospects for a capital-raising operation by British banking titan HSBC, and a report from the Asian Development Bank that Asian financial assets lost 9.6 trillion dollars last year, further dampened sentiment. Stock markets in Europe were meanwhile bucking the trend in early deals, with prices rising in London, Paris and Frankfurt. Japan, currently deep in recession, has been hammered by a global drop in demand for the cars, high-tech goods and machinery for which it is famous, putting the economy on course for its worst economic crisis since World War II. Japan logged a bigger than expected deficit of 172.8 billion yen (1.8 billion dollars) in January in its current account, the broadest measure of trade in goods and services, according to official data. Exports almost halved from the level a year earlier, reflecting a rapidly worsening global economic climate, notably in the United States. The deficit was the largest since comparable records began in January 1985 and marked a dramatic turnaround from the surplus of 1.164 trillion yen a year earlier. The figure was "shocking," Toshihiro Nagahama, a senior economist at Dai-ichi Life Research Institute, told Dow Jones Newswires. "I'm afraid that Japan's current account will likely be in the red ink for months ahead. Because we can't expect that the US economy will hit a trough in the near term, Japan's exports will very likely remain very weak," he said. Historically, Japan has run a large surplus in its current account thanks to brisk foreign demand. But the global crisis has prompted US and European consumers to tighten their purse-strings, forcing Japanese companies such as Toyota and Sony to launch a wave of job cuts. "The deficit was due to the continuing deterioration in exports," said Hiroshi Watanabe, senior economist at Daiwa Research Institute. "We believe the trend will continue for the time being as Japanese companies are likely to spend most of 2009 trying to adjust their inventories," he said. There are now fears that the government will report later this week that the economy shrank even more in the fourth quarter of 2008 than an initial estimate of a 12.7 percent annualised drop. Analysts also expect gross domestic product (GDP) to suffer another large contraction in the first quarter of 2009. "The collapse in exports will make another large negative contribution to Japan's GDP in the first quarter," warned Julian Jessop, an analyst at the research firm Capital Economics. The Asian Development Bank meanwhile released a new study showing that Asia, apart from Japan, saw 9.6 trillion dollars wiped off the value of financial assets last year - more than a year's worth of GDP. "This is by far the most serious crisis to hit the world economy since the Great Depression," ADB president Haruhiko Kuroda said. "While this crisis originated in the US and some European countries, by now no region or country is insulated," Kuroda said. The ADB report estimated a total of 50 trillion dollars in capital losses around the world in 2008. HSBC, heavily exposed in Asia, was also rattling investor nerves on Monday. Hong Kong-listed shares in the bank closed 24.1 percent lower on worries about its bid to raise capital. Last week, the Britain-based bank announced worse-than-expected annual results and said it hoped to raise 17.8 billion US dollars in a record British rights issue. The bank reported a 70 percent tumble in annual net profit, mainly due to the dire performance of its US unit where it has written off a huge chunk of its debt. In Washington the top economic adviser to US President Barack Obama said world leaders should focus on boosting demand ahead of next month's G20 summit in London. "This notion that the economy is self-stabilising is usually right but it is wrong a few times a century," Lawrence Summers, who heads the White House's National Economic Council, told the Financial Times. "And this is one of those times." He called for "extraordinary public action" to confront the crisis.