Chinese premier says all Chinese must “share fruits of reform and development”.
US markets edged higher, although investors remained nervous about mortgage defaults and a strengthening yen.
The Dow Jones industrial average was up 0.5 per cent at 12,170.55 by late morning, with the Standard & Poor’s 500 index was up 0.20 per cent and the Nasdaq composite index up 0.09 per cent.
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Matt Buckland, a trader at CMC Markets, said: “The fact that the FTSE closed Friday’s session virtually unchanged may have left some thinking that the recent slide in equity markets may be at an end, but triple-digit losses on the Dow ahead of the weekend break have taken their toll on Asian markets.”
The Nikkei 225 index, the region’s largest stock market in Tokyo, fell for a fifth day on Monday, tumbling by 3.34 per cent, to finish at 16,642.25 points.
Since reaching a nearly seven-year high last Monday, the index has plummeted 8.64 per cent over the last five trading sessions.
Hong Kong blue chips fell four per cent in their biggest one-day percentage drop since October 23, 2003, amid a sell-off.
The benchmark Hang Seng Index ended at 18,664.88 points.
The China Enterprises index of Hong Kong-listed shares in mainland companies, fell 5.1 per cent to 8,528.46, its lowest close since November 29.
The decline was the worst one-day percentage loss since May 22.
Rest of the region
Markets in Australia, the Philippines, India and South Korea were all down sharply, continuing their slide from last week, when a nine per cent plunge in Chinese stocks triggered a drop on Wall Street and other global markets.
Analysts said the declines could continue for at least a while longer.
Jose Vistan, research director at AB Capital Securities, said: “It still looks bad tomorrow, since the drop in the Asian markets may pull down markets in Europe and the US later in the day … It’s snowballing.”
The Korea Composite Stock Price Index fell for a fourth day, sinking 2.7 per cent, while Australia’s benchmark S&P/ASX200 index fell for a fifth day, tumbling 2.3 per cent. In India, the market opened 3.7 per cent lower.
“Basically, the fall is because global markets are seeing a down trend,” said Devina Mehra of First Global, a brokerage firm in Mumbai, India.
She said the fast rise in India‘s market in recent years was “overdone and expectations were too high”.
In China, the Shanghai Composite index fell a more modest 1.6 per cent, but foreign-currency denominated “B shares” tumbled after officials denied rumors those stocks might be merged with the mainstream Chinese-currency “A shares”.
A lack of market-boosting news as the Chinese national legislature began its annual session also appeared to sap buying enthusiasm.
The yen’s recent surge hit Japanese exporters including Canon, Sony and Toyota as share price fell.
Dip in oil prices
Oil prices dropped more than 3 per cent to below $60 a barrel amid concerns any global economic slowdown could hit energy demand, especially in top consumers such as the United States and China.
Olivier Jakob of oil research consultancy Petromatrix, said: “Everything really depends on the equities markets.
“The fundamentals of oil are quite solid, but it’s going to be hard for oil to do anything until we feel that the equities market correction is over.”
US crude fell $2.00 to $59.64 by 1722 GMT after trading as low as $59.55 earlier.
London Brent crude was down $2.00 at $60.08.