Tokyo- Asia-Pacific stocks on Thursday mirrored the overnight plunges on Wall Street as credit dried up and fears rose that more financial companies would fail.

The biggest drops in the region were seen in Hong Kong, whose benchmark Hang Seng Index fell as much as 7.38 per cent before recovering; the Philippines at 4.25 per cent; and Thailand, which regained some ground after suffering losses of more than 5 per cent during the trading day.

The rebounds were seen after six central banks agreed to pump billions of dollars of extra credit into financial markets amid fears that this week's crisis was drying up liquidity.

Financial shares still bore the brunt of Thursday's losses. Australia's Macquarie Bank fell a whopping 22 per cent - meaning the share price of the country's largest listed investment bank had halved in the past month.

"There is a complete collapse of confidence," said Hong Kong analyst Francis Lun, general manager of Fulbright Securities. "The financial crisis in the US is hitting everyone, and everyone is running for cover. If the largest insurance company [AIG] can fail, than no one is safe."

Turmoil related to the plunging subprime US mortgage market this week has caused a US government bailout of AIG, or the American International Group Inc; the collapse of the investment bank Lehman Brothers Holdings Inc; and the sale of another Wall Street titan, Merrill Lynch and Co.

As a result, the three major US stock indices fell more than 4 per cent Wednesday. The losses were followed by news that Morgan Stanley was looking for buyers and Britain's Lloyds TSB Bank was buying ailing mortgage lender HBOS, or the Halifax Bank of Scotland.

Lun told the government-run radio station RTHK that he expected the decline to continue for days to come.

"This kind of loss of confidence happens perhaps once in a decade," he said. "There will be no end to the decline until the American market shows some support. It will not bottom out."

Losses in Tokyo exceeded 2 per cent. Its benchmark Nikkei 225 Stock Average hit its lowest level in more than three years at 11,489.3, closing down 2.22 per cent, while the broader Topix index of all first-section issues also fell 2.12 per cent to 1,097.68.

To ease the negative effects of global financial turmoil, the Bank of Japan pumped an additional 2.5 trillion yen (23.9 billion dollars) into the money markets Thursday, joining five other central banks, including the US Federal Reserve and the European Central Bank, in taking coordinated action to ease global financial turmoil.

The bank has injected 5.5 trillion yen into the market over the past two days.

After the Hang Seng plummeted more than 7 per cent upon opening, it made a remarkable recovery and nearly broke even for the day, closing down 0.03 per cent at
17,632.46, thanks in part to the central banks' actions.

Shortly before the close of trading, the index was actually up by more than 1 per cent. The recovery was led by heavy buying of China Mobile Ltd shares and Chinese banking stocks.

Analysts said the afternoon rally indicated a possible rebound in the index, which is down nearly 50 per cent from its peak of just below 32,000 at the end of October.

In Australia, the ASX 200 fell 2.4 per cent to close at 4,607. A fourth day of losses was stemmed by bargain-hunting near the close that dragged the market up from an intraday low of 4,563.

Stocks are now languishing at a three-year low with finance sector counters the worst affected. Besides Macquarie Bank's astonishing losses, the biggest high street bank, National Australia Bank, was down 4 per cent.

The bright spot was the gold mining sector, thanks to the soaring price of bullion. Its stocks rose.

The hammering Macquarie received reflected concern that the bank could have difficulty refinancing 5 billion Australian dollars (4 billion US dollars) in debt.

Treasurer Wayne Swan said the "excessive provision of credit" needed to be addressed. "I think one of the lessons from what's occurred internationally is that may have been the case," Australia's finance minister added.

China's main stock market fell by nearly 6 per cent in early trading before regaining ground in the afternoon. The Shanghai Composite Index, which tracks shares traded in local and foreign currencies, fell 1.72 per cent to 1,895.84. The composite index of the smaller exchange at Shenzhen was down 2.3 per cent at 547.1.

Shares in banking and insurance companies led the plunge after reports that several major Chinese banks held bonds in bankrupt Lehman Brothers. The Chinese banks also face new pressure from a cut in the base lending rates by the central bank.

India saw its stocks rise for the day after they had suffered initial drops. The benchmark Sensex, which plunged 5.3 per cent soon after the markets opened, rallied to gain
0.4 per cent and close at 13,315.60 after the government said the country's public-sector banks would not be affected by the financial turmoil in the United States.

The broader S&P CNX Nifty of the National Stock Exchange, which was down by 3.37 per cent in morning trading, also rose 0.75 per cent to 4,038.15.

In other parts of the region, Taiwan's Taiex was down 2.74 per cent to 5,641.95, South Korea's Kospi fell 2.3 per cent to 1,392.42 and New Zealand's NZX 50 dropped 3.5 per cent to 3,158.9 in its biggest one-day fall in nearly six years.

The Stock Exchange of Thailand Index was off 0.8 per cent, closing at 600.38.

Singapore's Straits Times Index shook off the region's blues and rose 0.33 per cent to 2,419.21. The Jakarta Composite Index also rose, but the Philippine Stock Exchange's 300-share composite index tumbled 4.25 per cent to 2,352.37 amid disclosures that at least three Philippine banks have investments with Lehman Brothers.

"It's still a whiplash of the sub-prime crisis," said Astro del Castillo, managing director of First Grade Holding Inc. "Uncertainty is still up in the air, so investors are playing it safe." (dpa)