HSBC puts Hong Kong on the slide

CONFUSION over the direction of the US economy sent Asian markets south, while disappointment with earnings from HSBC Holdings added more pressure in

South Korean shares tumbled after a close encounter between a North Korean fighter and an American spy plane further raised tensions on the peninsula.

Tokyo's Nikkei 225 Average was dragged down 10.18 to 8480.22 by weakness in export stocks after more mixed news on the US economic front left Wall Street sharply lower.

The prospects of slower sales to Japan's best market offset hopes of a weaker yen after apparent intervention in foreign exchange markets. Car stocks fell as much as 2% while falls in electronics stocks reached 4%.

A warm response to a local cash-raising exercise by Japan's third-largest bank, Mitsubishi Tokyo Financial Group, gave the shares a boost, but this soon faded although rival bank stocks held their ground.

Hong Kong's Hang Seng index wilted 86.9 to 9181.9, led by bank stocks as analysts gave some faint praise for the full-year results of HSBC. Reckoning that the 25% jump in earnings was only just in line with expectations, Merrill Lynch put a 'neutral' label on the stock while investors were also disappointed with the 1.5% fall in profits from the bank's local arm.

With credit-card delinquency up almost 100% and bankruptcies in the territory still rising, Hong Kong and Shanghai Bank is facing another tough year, and shares of the parent HSBC lost 75 cents to HK$84.25. Shares of HSBC's 64%-owned Hang Seng Bank fell HK$1 to HK$85 after disappointing profits figures which had analysts downgrading their forecasts for the current year.

Monday's rare rally in South Korea was wiped out as the Kospi index plunged more than 2%, losing 14.91 to 575.13, after nerves were jangled by the harassing of a US reconnaissance aircraft by North Korea. The market was also hit by a 7.5% tumble in the shares of steel giant Posco, which reported disappointing profits for last month.

Sydney stocks felt the fallout from Wall Street and the All Ordinaries index lost 4.6 to 2787. Shares in News Corp followed the New York trend with a 1.5% retreat while big resources stocks were hurt by concerns over the impact on demand for raw materials if the US economic slowdown develops.

Taiwan's technical sector was unsettled by Nasdaq's overnight fall and fading optimism about chip sales to the US this year. The Weighted Average fell 32.14 to 4494.55. Two days of gains were enough for Singapore traders, who indulged in some heavy profit-taking and sent the Straits Times index down 10.2 to 1269.0. Malaysian stocks held on to some early marginal gains to push Kuala Lumpur's Composite index up 2.42 to 649.22, but Thailand's recent buoyancy evaporated and the SET fell 3.89 to 363.78. Jakarta's Composite index dipped 1.82 to 397.40.

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