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Asian investors lead downward spiral

Stock prices fell across Asia Monday as investors registered their pessimism on the odds the region will return to its fast-track growth any time soon. Markets in Europe followed suit and the selling spread into early U.S. trading.

Hong Kong, where the 10 percent crash Thursday sent shivers around the world, again led the way with a 5.8 percent plunge in the blue-chip Hang Seng Index. It lost 646.14 points to end at 10,498.20 - almost wiping out the nearly 7 percent recovery it made Friday.Shares initially moved sharply lower on the London Stock Exchange, Europe's biggest market, and tumbled at the opening of the New York Stock Exchange. But losses tapered off after the initial downward spikes.

The Dow Jones industrial average was off more than 80 points initially but recovered a bit of the lost ground and was down 33.89 at 7,681.52 at midmorning. The world's best-known stock indicator had tumbled almost 320 points over the previous two sessions, a drop of about 4 percent.

At the London Stock Exchange, Europe's biggest market, the Financial Times-Stock Exchange 100-share index, was off by 81.0 points, nearly 1.7 percent, at 4,889.2 with two hours left to trade. Earlier, the so-called "footsie" had been off by 112.6 points.

"The slide isn't going to go in a straight line. It's going to get hit today and then over the next two or three weeks we'll continue the slide," predicted Glen Poulter, a stock salesman at Schroders in London.

Elsewhere, Frankfurt's DAX index closed with a loss of 4.2 percent, while the CAC 40 in Paris was off by 2.4 percent in afternoon dealings.

The unsettled markets in Hong Kong spread some of the biggest ripples closer to home, in Tokyo, Seoul and Sydney.

Tokyo's benchmark 225-issue Nikkei Stock Average lost 325.38 points, or 1.87 percent, closing at 17,038.36 points - the lowest in more than two years.

"People can't buy shares until (markets in) Asia stabilize," said Seiji Fujimoto, a manager at the stock trading division of Tokyo Securities.

The Korea Stock Exchange's key index was down 3.3 percent, or 18 points, closing at a five-year low of 530.47. A major factor was the decline of the South Korean won to 942.9 to the U.S. dollar, from a Friday closing value of 929.5.

And in Sydney, the All Or-di-naries Index was down 3.3 percent, led by an 11-percent fall in gold shares that wiped U.S. $690 million off their value. The Australian dollar has lost 2 cents since Friday to be worth 68.7 U.S. cents.

A four-day market slide of 25 percent in Hong Kong turned into a rout Thursday and triggered a global chain reaction from which there was a partial recovery Friday. In New York, the Dow slid a further 1.7 percent Friday to 7,715.41, adding to Asia's nervousness as a new week of trading began.

Sluggish trading Monday produced lesser declines in smaller markets like Jakarta, Thailand, Kuala Lumpur and Taiwan; only Singapore was up marginally. Results in the Philippines were mixed.

Regional markets were partially reflecting weaknesses in their national currencies and partially taking their cue from Hong Kong, which until last week's crash had appeared a lone pillar of strength.

That changed when Hong Kong's currency - the only one in the region still pegged to the U.S. dollar - came under speculative attack and government counter-measures sent interest rates soaring. This in turn drove down stocks, especially in banking and real estate.