HONG KONG/LONDON (AFP) - Asian shares closed down Tuesday after a Wall Street slide on renewed fears about the US credit crisis, with investors also digesting falling profits as a global economic slowdown bites.
The Japanese market, Asia's biggest, ended nearly 1.
5 percent lower after official figures showed unemployment rose to two-year high and consumer spending fell.
Investors were also digesting a profit warning Tuesday from Sony after its earnings almost halved, while Toshiba plunged into the red as a price war, a stronger yen and the economic slowdown squeeze Japan's technology giants.
Among other major Asian markets, Taiwan tumbled three percent, while Hong Kong, Australia, China and South Korea ended between 1.
5 percent and two percent in the red.
Singapore also finished lower.
The Indian stock market ended Tuesday nearly four percent lower after the country's central bank hiked borrowing costs in a bid to tame high inflation running at 13-year highs.
Asian markets were shaken by news that Wall Street titan Merrill Lynch is dumping billions of dollars of mortgage debt at a steep loss and raising 8.
5 billion dollars in new capital to ride out the financial crisis.
Investors were also rattled by news that US regulators had closed two regional banks.
Buyers were scarce ahead of US data due this week including gross domestic product and monthly jobs figures.
Meanwhile, Europe's main stock markets fell on Tuesday, hit by losses to banking shares after overnight declines on Wall Street.
The aviation sector was also in focus as British Airways and Spanish national airline Iberia announced they were in talks about a possible merger.
Approaching midday trade in London, the FTSE 100 index of top companies had fallen by 0.
53 percent to stand at 5,284.
70 points.
Frankfurt's DAX 30 dropped 1.
25 percent to 6,271.
57 points and in Paris, the CAC 40 shed 1.
54 percent to 4,257.
89.
The Euro Stoxx 50 index of leading eurozone shares declined by 1.
38 percent to trade at 3,267.
76.
US stocks had slumped by about 2.
0 percent on Monday as jitters re-emerged about the stressed financial system after news of the closure of two regional banks by federal regulators.
Nervousness about the banking system has reappeared in the wake of an announcement late Friday by regulators saying they had closed First Heritage Bank of Newport Beach, California, and First National Bank of Nevada, based in Reno, Nevada, declaring both undercapitalised.
Banks' share prices fell heavily throughout Europe's main markets on Tuesday.
In London, Barclays dived 8.
49 percent to 310 pence and Royal Bank of Scotland lost 6.
91 percent to 192 pence.
Deutsche Bank shed 4.
30 percent to 55.
85 pence in Frankfurt and Societe Generale fell by 5.
33 percent to 56.
15 euros in Paris.
In Switzerland, UBS was also sharply down.
British Airways was 2.
13 percent lower at 229.
5 pence after news it was in talks with Iberia about all-share merger.
Iberia shares were suspended in Madrid.
British energy giant BP gained 1.
83 percent to 529 pence after posting a 28 percent jump in net profits to 9.
47 billion dollars (6.
02 billion euros) in the second quarter on record-high oil prices.
The share price of Alcatel-Lucent stock rose 3.
39 percent to 3.
96 euros as the French-US telecom equipment giant said the two top managers behind the creation of the group were resigning after a huge 1.
1 billion-euro (1.
7 billion-dollar) quarterly loss.
Chief executive Patricia Russo from the Lucent part of the global group was to leave by the end of the year, and non-executive chairman Serge Tchuruk who was the head of Alcatel was to stand down on October 1.