Asian Markets Drubbed

Asian markets shrugged off the Federal Reserve's funding plan and Wall Street's slight closing gains on Thursday, as the major indices plunged in the worst regionwide selloff so far this month.

In Hong Kong and Japan, the Hang Seng and Nikkei finished at their lowest levels so far for December. The Hang Seng tumbled 776 points, or 2.7%, to 27,744, while the Nikkei dived 395 points, or 2.5%, to 15,536, led by big losses in financials Mitsubishi UFJ(MTU Quote) and Mizuho Financial(MFG Quote). The Taiwanese Taiex ended 302 points, or 3.6% lower, at 8187, its lowest level since the subprime crisis hit in mid-August.

The rest of Asia was sharply down, finishing points away from December lows. In China, the Shanghai Composite Index fell 137 points, or 2.7%, to 4958, falling through the recent benchmark 5000 level, while the South Korean Kospi dipped 11 points, or 0.6%, to 1915.

"I think it is a bit of an overreaction, and it's an overreaction to the confusion about what the Fed is doing," says Tim Rocks, a strategist at Macquarie Bank in Hong Kong. "All credit market issues are being saturated by typical year-end liquidity effects, so you've really just got to see through the next few weeks, and the Fed has been aware of this."