TOKYO — Japan's main stock index dived more than 5 percent Friday, leading other Asian markets lower, after a sell-off in banking shares roiled investors in Europe and the U.S.
Tokyo's Nikkei 225 lost 5.3 percent to 14,886.75 and Hong Kong's Hang Seng fell 0.8 percent to 18,395.69. South Korea's Kospi gave up 1.1 percent to 1,841.07 and Australia's S&P/ASX 200 fell 1 percent to 4,772.20. Shares in New Zealand, Taiwan and Thailand fell while Singapore and Indonesia rose. Markets in China and Taiwan are closed until Monday for Lunar New Year holidays.
Global stocks have been in a slump since the beginning of the year when China's market, which had been propped up by government buying, plunged dramatically. Concerns about China, however, are now just one of several factors driving the fall in stocks.
Investors recognize that prices rose too high during several years of artificial support from the ultra-easy monetary policies of central banks that were trying to foster economic recovery following the 2009 global recession. A crunch moment has arrived as global economic growth wanes again and the Federal Reserve signals it is still committed to raising U.S. interest rates from record lows.
The latest turmoil has centered on the stocks of banks, whose profits are threatened by slowing growth and the slump in oil prices.
"The sell down of global banking stocks continued overnight, slashing share prices in Europe and trampling US indices before a late session comeback," said Michael McCarthy, chief strategist at CMC Markets in Sydney. "While none of the fears that have rattled markets are yet realized, the relentless focus on possible risks will likely see another soggy Asia Pacific trading session," he said in a market commentary.
Fed Chair Janet Yellen voiced confidence in the U.S. economy in testimony to Congress on Thursday, but acknowledged risks, saying it was too early to tell whether they are severe enough to alter the central bank's interest rate policies.
That failed to reassure investors hoping the Fed would signal that rate hikes are off the table for this year, with financial companies taking the biggest hit.
U.S. shares recovered somewhat from sharp losses on Thursday, but the Dow Jones industrial average still closed down 254.56 points, or 1.6 percent, to 15,660.18. The Standard & Poor's 500 lost 22.78 points, or 1.2 percent, to 1,829.08 and the Nasdaq composite fell 16.76 points, or 0.4 percent, to 4,266.84.
Benchmark U.S. crude was up $1.23 to $27.44 a barrel in electronic trading on the New York Mercantile Exchange. The contract tumbled to $26.21 in New York on Thursday, its lowest level since May 2003, as investors fled to the traditional havens of bonds and precious metals. Gold jumped 4.5 percent.
Brent crude, a benchmark for international oils, gained $1.25 to $31.31 a barrel in London. It dropped 78 cents, or 2.5 percent, to $30.06 on Thursday.
In currency trading, the dollar edged lower to 112.24 yen from 112.29 the previous day. The euro fell to $1.1309 from $1.1315.
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