Asian markets tumble on fears over Hungary

TOKYO: Asian stock markets tumbled on Monday, dragged down by weak US employment figures and fresh fears that Europe's debt crisis could spread as Hungary scrambled to calm worries that the nation is close to defaulting on its debts.

Japan's benchmark Nikkei 225 stock average plunged 396.95 points, or 4 per cent, to 9,504.24 with investors also cautious before Japan's new leader, Naoto Kan, forms his Cabinet on Tuesday.

South Korea's Kospi lost 2.6 per cent to 1,621.67 while Australia's S&P/ASX 200 was down 3.1 per cent at 4,335.90.

Hong Kong's Hang Seng dropped 2.9 per cent to 19,211.67. Benchmarks in mainland China, Singapore and Taiwan also fell sharply.

Selling spread in Asia on fears that Europe's debt problems could spread after Hungarian officials said last week the nation was at risk of a Greek-style fiscal crisis.

The comments shocked investors, pushing the euro to a fresh four-year low against the dollar. Hungary is part of the European Union, but keeps its national currency _ the forint, which dropped around 5 per cent last week.

Hungarian officials scrambled to calm market worries, insisting Saturday recent comments were ``exaggerated.''

``With Hungary under the spotlight due to fiscal uncertainty, investors are worried Europe's debt crisis could spread to other nations quickly, and the crisis could become unstoppable,'' said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd.

Apart from Hungary's woes, Asian markets were also knocked by disappointing US jobs data. The US government's May jobs report showed Friday the US economy created 432,000 jobs last month, far fewer than the expected 513,000. Most of the jobs were temporary hiring by the government for the US census.

The result underlined that the US economic recovery is not yet picking up the momentum that investors have been looking for. The Dow Jones industrial average plunged Friday 3.2 per cent to 9,931.97.

In currencies, the dollar fell to 91.08 yen in Tokyo Monday from 91.80 yen in New York late Friday. The euro declined to $1.1889 from 1.1943.

Benchmark crude for July delivery was down $1.46 at $70.05 a barrel in electronic trading on the New York Mercantile Exchange.