Airline stocks and the Hong Kong market in particular were hard hit on Wednesday by reports that a medical researcher in Singapore has tested positive for SARS.

"SARS has affected sentiment, but the market was due for some profit taking," Herbert Lau, research director as Celestial Asia Securities in Hong Kong said

Hong Kong's Hang Seng Index was 2% weaker at mid-day.

Having ravaged the region's tourism earlier this year, concerns of a fresh SARS outbreak ahead of China's national day holiday in October forced Cathay Pacific Airways Ltd to tumble 4.2%. 

Many mainlanders are expected to visit Hong Kong on the holiday.

"SARS has affected sentiment, but the market was due for some profit taking"

Herbert Lau
Market Analyst



Shanghai-based China Eastern Airlines Corp Ltd shed 6% and its larger rival China Southern Airlines Co Ltd tumbled almost 5%.

Japan Airlines System and Eva Airways also slumped, but Singapore Airlines was flat after falling 6% on Tuesday.

Benchmark indices fell 1.2% in Singapore, 0.6% in Australia and 1% in Taiwan.

Shares in China, where SARS originated, held steady as investors snapped up stocks in drug companies likely to benefit from worries over the disease.