Asia stocks hit 23-month low on financial woes

Asian shares fell broadly on Thursday, with shares outside Japan at the lowest since October 2006, hit by persistent instability in the financial sector, while the U.S. dollar struck a one-year high against the euro.
Heightened volatility and the potential for sharp economic weakness outside the United States convinced U.S. investors to cut their holdings of riskier assets such as emerging market stocks and commodities and for now keep their money at home.
European stock index futures fell, with Eurostoxx 50 Germany's DAX and France's CAC 40 all down about 0.3% as investors worried about the fate of some troubled financial institutions.
Bank stocks including Mitsubishi UFJ Financial Group fell 5% after Lehman Brothers posted a record quarterly loss of $3.9 billion. The dismal results from Lehman, which is trying to shed assets to stay alive, sent a message to investors that the year-long global credit crisis will likely claim more victims before ending.
Tokyo's Nikkei share average closed 2% lower at a six-month low and the MSCI Asia Pacific ex-Japan index dropped 2.8% to its lowest since October 2006.
"We believe inflation concerns are now waning and the new worries are around the broadening of the economic slowdown to Europe, Japan and emerging markets. In our view, this risk is very real," said Adrian Mowat, JPMorgan's emerging markets and Asia-Pacific equity strategist, said in a note.
Bank shares took a beating with China Construction Bank, the country's second-largest bank, down 4.2% and Industrial and Commercial Bank of China lost 3.8%.
Hong Kong's Hang Seng index declined 2.7% to a one-year low. Shares of China Mobile fell 4.4% on a new policy in some of the company's markets that could make the world's largest cellular operator less competitive.
The regional weakness put the MSCI all-country world index on course for the ninth down day of the last 10. The index hit a two-year low on Wednesday.