Updated from 1:01 a.m. EST

Asian markets plunged Friday, with stocks in Japan closing lower by 5.6%, on news that a $14 billion bailout of U.S. automakers collapsed in the Senate after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

Premarket futures in the U.S. were indicating extremely weaker losses when Wall Street opens Friday.

Japan's Nikkei 225 stock average fell 485 points to 8235.87. The Hang Seng index in Hong Kong declined 5.5%, while the S&P/ASX 200 index in Australia dropped 2.4%.

The dollar's fall to a 13-year-low against the yen also accelerated selling on the Tokyo Stock Exchange, hitting exporters such as auto makers and electronics.

The dollar fell as low as 88.16 yen in the afternoon, its lowest level since Aug. 2, 1995 when the U.S. currency fell to 88.02 yen.

Toyota

(TM) - Get Report

fell 10.1%,

Nissan

(NSANY)

lost 11.5% and

Honda

(HMC) - Get Report

plunged 12.5%.

Sony

(SNE) - Get Report

fell 6%, and

Toshiba

was down 3.7%.

The rescue of U.S. automakers collapsed late Thursday night after bipartisan talks broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.

Stocks in Europe opened lower. The FTSE 100 index in London fell 4%, while the DAX in Frankfurt was down by 4.3%.

In New York on Thursday, stocks fell as as dismal job numbers, an unexpectedly widened deficit, and the federal bailout of automakers

General Motors

(GM) - Get Report

,

Ford

(SYMBOL)

, and

Chrysler

weighed on investors' minds.

The

Dow Jones Industrial Average

tumbled 196.33 points, or 2.2%, to 8565.09. The

S&P 500

slipped 25.65 points, or 2.9%, to 873.59, and the

Nasdaq

fell 57.60 points, or 3.7%, to 1507.88.

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