HONG KONG Asian stock markets tumbled Friday amid growing alarm as oil prices spiked above $141 a barrel for the first time and Wall Street plummeted overnight.
The sell-off spread across the entire region, with every key index in the red.
Shanghai's benchmark plunged more than 5 percent to 16-month low. India's Sensex was down 3.8 percent in afternoon trade. Japanese stocks dropped for a seventh day to a two-month low. Markets in Hong Kong, South Korea, New Zealand and the Philippines were off around 2 percent.
Sentiment took a hit after U.S. stocks sank Thursday, with the Dow Jones industrial average sliding more than 3 percent to its lowest level in almost two years.
Worries about the outlook for the U.S. economy a vital export market for Asia intensified after dismal news about a number of industries. Analysts downgraded General Motors Corp., Citigroup and Merrill Lynch & Co., while tech companies Oracle Corp. and BlackBerry maker Research In Motion Ltd. offered disappointing forecasts.
Oil prices, which climbed above $140 a barrel late Thursday, surged above $141 in Asian trading Friday, spurring further concern about inflation and rising costs.
"We've still got bad news on the credit crunch, we've got bad news about consumers," said Garry Evans, pan-Asian equity strategist with HSBC in Hong Kong. "The macro environment is not a good one and people are very risk averse."
In China, the Shanghai Composite Index sank 5.3 percent to 2,748.43 points, the lowest close since February 9, 2007. Aside from record crude prices, reports of speculation about possible bank rate hikes were spooking investors.
Institutional investors are becoming disappointed with the authorities for staying hands-off during this year's slide, said Xu Zhiyuan, strategist at Capital Edge Investment and Management in Shanghai.
"Investors are selling shares regardless of the loss," he said.
Huaneng Power International Inc. was one of the hardest-hit stocks, falling nearly 10 percent. Airlines also suffered from the oil news, with China Eastern Airlines falling 9.7 percent and China Southern Airlines falling 9.5 percent.
Tokyo's benchmark Nikkei 225 index shed 2 percent to 13,544.36, the lowest finish since late April. Honda Motor Co. lost 2.7. Sony Corp. dropped 4.3 percent.
Indian stocks sank as investors worried about inflation that has risen to 13-year highs and that recent interest rate hikes would temper consumer spending.
"Sentiment is bearish. There are fears that crude will touch $180, this is a worry that cannot be stamped out easily," said Gul Tekchandani, a Mumbai-based investment adviser. "Few can stomach this volatility, plus there are weak global cues with the U.S. economy also down."
Hong Kong's Hang Seng index trimmed earlier losses to close down 1.8 percent at 22,042.35. Refiner China Petroleum & Chemical Corp, or Sinopec, lost 3.6 percent, and airline Cathay Pacific was down 1.7 percent.
Mobile phone maker Foxconn International Holdings, Motorola's primary contract manufacturer, tanked almost 8.5 percent amid fears over consumer demand.
Elsewhere, the main Philippine Stock Exchange Index ended 2.2 percent lower, it's lowest finish in 21 months.
In currency trading, the dollar stood at 106.86 mid-afternoon in Tokyo, little moved from 106.91 yen in New York late Thursday. The euro stood at $1.5772 in mid-afternoon in Tokyo, compared with $1.5751 in New York.