Rest of region also sold-off, with Shanghai dropping as trading resumes HONG KONG (MarketWatch) -- Asian markets tumbled Monday as concerns about a raging global financial crisis deepened. Japanese shares were down sharply -- with banks such as Mitsubishi UFJ Financial Group falling hard, and Sony Corp. moving below a five-year low -- while Shanghai-listed stocks also dropped as trading resumed after a week-long holiday. "The fact that the [U.S. bailout package] has gone through hasn't seen a freeing up of the credit markets, and because that hasn't happened, people are wondering what else the government can do now," said Andrew Sullivan, a sales trader at Main First Securities in Hong Kong. In Tokyo, the Nikkei 225 Average slumped as low as 10,374.38 during the session to its lowest level since February 2004. The broader Topix index, meanwhile, fell below the psychologically-important 1,000-point level for the first time since December 2003 during the session, hitting a low of 992.15. The benchmark Nikkei was recently down 4.7% at 10,420.39, taking losses into a third straight session, while the Topix was down 4.9% to 997.19. In mainland China, the stock markets declined sharply, catching up with the rest of the region, as trading resumed for the first time after last week's National Day holidays. The benchmark Shanghai Composite dropped 3.5% to 2,213.08, while the Shenzhen All Share index slid 2.9% to 596.25. The drop came in spite of news the People's Bank of China has said it will restart a program allowing domestic companies to issue medium-term notes for share buybacks and other purposes. The move is expected to give non-financial firms access to funds at a lower cost than bank loans. See full story. In Hong Kong, the Hang Seng Index lost 3.6% to 17,053.07, while the Hang Seng China Enterprises Index fell 5% to 8,564.12. Shares of Ping An Insurance (Group) Co. of China slumped fell 3.5% in Hong Kong, but rose 2.5% in Shanghai trading, after the insurer said over the weekend it would book an impairment loss of 15.7 billion yuan ($2.27 billion) in the third quarter, owing to its investment in the Belgian-Dutch financial services company Fortis NV. See full story. The losses in Hong Kong were contained after Citigroup retained its buy rating on the stock, as the "solvency margin for the company would still be above 300%," adding Ping An has no immediate need to raise capital. Sydney, Seoul, others Australia's S&P/ASX 200 shed 3% to 4,554.40, and South Korea's Kospi lost 3.9% to 1,364.33, while New Zealand's NZX 50 index dropped 3.3% to 3,048.38. Singapore's Straits Times index lost 3% and Taiwan's Taiex gave up 2.9%, while India's Sensitive Index, or Sensex, dropped 3.1% in the early minutes of trading. The regionwide decline came in spite of the passage into law of the $700 billion U.S. financial rescue package last week, as investors worried about the spread of the global crisis to Germany. Germany on Sunday explicitly guaranteed deposits in banks held by individuals, hours before German officials set up a 50 billion euro ($68 billion) bailout of troubled commercial property lender Hypo Real Estate to avoid broader damage to Europe's largest economy. See full story. Analysts said there were problem areas within Asia, as highlighted by rising interest rates in the inter-bank money markets. "The increase in Asian inter-bank rates doesn't appear to be a function of a lack of domestic liquidity but because banks have become reluctant to lend to each other as they believe counterparty risk is rising," Merrill Lynch analysts said in a note to clients. "While these fears, in our view, should ultimately prove unwarranted, rising inter-bank rates (and in turn lending rates) coupled with tighter lending standards will place further downward pressure on regional growth," they said.

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