AFP - Asian stocks continued to fall early Tuesday, following a Wall Street dive on fears over the fate of some of the world's biggest financial companies amid the global crisis.
Japan sought to boost sentiment by saying it would free up five billion dollars from forex reserves to lend to troubled companies, with a Toyota subsidiary reportedly asking for a two billion dollar loan.
The previous day US markets were hammered down to 12-year lows on news that the US government had rescued insurer American International Group again, with 30 billion dollars, to stave off its collapse.
European markets were roiled after British banking giant HSBC said that it needed billions in new capital to cope with the financial crisis.
Hong Kong opened 2.8 percent lower, Sydney fell 2.5 percent, Shanghai was down 1.5 percent, and Tokyo dropped 1.0 percent, coming close to a 26-year low.
South Korea was 0.7 percent lower and New Zealand was down 2.8 percent.
The losses in Asia early Tuesday were not as bad as Wall Street's fall overnight as regional bourses had already fallen on Monday, traders said.
"We could improve a bit because early selling pressure wasn't overwhelming," Tolhurst associate director Peter Morgan told Dow Jones Newswires. "We factored in a lot of it yesterday (Monday)."
In Asia's largest economy, Japan's Nikkei Nikkei-225 dropped 75.26 points, or 1.03 percent, by noon, approaching its October intra-day low of 6,994.90 which was the weakest since 1982.
Worse falls were avoided as the government is reportedly considering using public funds to purchase stocks directly from the market to boost prices, although the timing and size of the intervention remained unclear.
"The possibility of a stock market rebound on increased public support is surely making some sellers hesitate," said Akira Ishida, head of equities at Chuo Securities.
Japanese Finance Minister Kaoru Yosano warned that excessive falls in share prices could not be ignored, telling reporters: "We shall calmly monitor the movement. But we cannot overlook excessively large falls."
The Nikkei stock index has fallen more than 18 percent in 2009, approaching levels last seen in 1982, after a record 42 percent plunge last year.
Yosano also said Tokyo will lend five billion dollars from its foreign currency reserves to the state-backed Japan Bank for International Cooperation (JBIC) to keep credit flowing.
"Taking into account the current severe conditions for those trying to procure foreign funds, we've decided to lend foreign currencies (from the reserves) to the JBIC as a temporary, extraordinary measure," he said.
Toyota Motor Corp.'s financial unit said Tuesday it had asked to borrow money from the JBIC, with local media putting the request at about two billion dollars. It would be the bank's first loan to a Japanese auto maker.
Japan has foreign exchange reserves of more than one trillion dollars, the second-largest in the world after those of China.
Tokyo has already announced a series of steps to stimulate the economy, including a plan to hand two trillion yen (21 billion dollars) back to the public to kick-start consumer spending.