By Margarita Snegireva. Hong Kong stocks skidded on heavy selling during a shortened session ahead of the Lunar New Year holidays on declines in HSBC Holdings and China Life, while Japanese stocks plunged on financials such as Mitsui Sumitomo Insurance and shipping forms such as Mitsui O.S.K. Lines.
Australian shares were dragged lower by mining giant BHP Billiton after it made a sweetened stock offer for rival Rio Tinto and proposed a $30 billion buyback offer.
Stock markets in South Korea, China, Taiwan and Vietnam are closed Wednesday through Friday for Lunar New Year holidays, while Hong Kong , Singaporean, Malaysian and Indonesian markets are closed Thursday and Friday.
Analysts said an unexpected contraction in the U.S. service sector announced by the Institute for Supply Management Tuesday renewed worries that the U.S. economy is entering a recession.
"The Hong Kong market is affected by the recession and financial crisis in the U.S. and Europe . The bear market will continue for a period until it reaches the bottom," said Francis Lun, a general manager at Fulbright Securities Ltd.
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