Sharemarkets across Asia plunged yesterday as frantic investors dumped stocks following massive losses on Wall Street and on growing fears of a deep global recession.

In Japan the benchmark Nikkei 225 index was down 9.6 per cent at 8276 in by the close after falling by as much as 11 per cent earlier in the day. The sharp falls prompted the Tokyo bourse and the Osaka Securities Exchange to briefly suspend some futures and options trading during the morning.

"Selling is unstoppable in New York and Tokyo," said Yutaka Miura, senior strategist at Shinko Securities. "Investors were gripped by fear."

The cost of protection against defaults in Asian sovereign and corporate debt soared to record highs yesterday amid fears the financial crisis could soon reach the region, traders said.

"There's a general consensus that Asia is in better shape. But that doesn't mean it won't be affected. Clearly once American consumers start to scale back and then in Europe, that's going to affect Asia," said Adil Chaudhry, head of regional credit markets for Scotiabank in Singapore.

There is considerable trepidation about how Wall St will trade overnight after an avalanche of selling took the Dow down 678.91 points, or 7.33 per cent, to 8579.19 on Thursday.

New Zealand's NZX-50 fell on opening and ended up losing 139 points or nearly 5 per cent, as its biggest one day loss since the 1987 crash dragged the market back to its lowest point since 2004.

There were only nine rises on the market and 94 falls.

Across Asia brokers asked how low markets could go with the Japanese market down more than 11 per cent, the Philippines market down 8.3 per cent and Hong Kong market down 7.7 per cent during New Zealand's trading day. The Australian market closed down 8.34 per cent.

Accelerating the pessimism were insolvencies in the insurance and real estate sectors that weakened confidence in whether Japan's economy would weather the global financial crisis relatively unscathed.

Yamato Life Insurance went bankrupt on Friday, becoming the first major Japanese financial company to collapse on the fallout from the US credit crisis. On Thursday, New City Investment Corp's bankruptcy filing made it Japan's first real-estate investment trust to fail.

Yesterday's developments left individual investors in Tokyo shellshocked.

Kenji Akasaka, 69, president of a local printing company, said he had never seen it this bad in the 40 years he has traded stocks. He said he invests mainly in blue-chips including Toyota and Nintendo - both of which have lost about half their value over the last year.

"I pray before I go to bed that the Dow will recover," said Akasaka, 69, as he scanned a monitor displaying the latest market levels.

But Japanese Economy Minister Kaoru Yosano sought to reassure the country even as markets tumbled.