The steep decline in U.S. stocks sent Asian stock markets tumbling sharply Tuesday as investors were rattled by concerns over an expanding global financial crisis.
Japan's benchmark Nikkei 225 stock index fell 4.8 percent to 11,632.99, falling under than 12,000-point level for the first time since mid-March.
South Korea's Kospi shed 6.2 percent, and Taiwan's benchmark was off 4.6 percent. The battering in Australia and New Zealand wasn't quite as severe, with key indices down 2.4 percent and 2.7 percent respectively.
The early bloodletting in Asia followed a bleak Monday for world stock markets, which were hard hit after a double-fisted blow from Wall Street -- news that Lehman Brothers had filed for bankruptcy and Merrill Lynch would be sold to Bank of America.
The Dow Jones industrial average fell more than 500 points in its largest point drop since after the September 11, 2001, terror attacks.
In Europe, the FTSE-100 share index closed down 3.9 percent in London, the Paris CAC-40 slipped 3.7 percent and Germany's DAX 30 index of blue chips sagged 2.7 percent.
Asia's biggest stock exchanges in Japan, Hong Kong and South Korea were closed Monday for national holidays.
In Tokyo, Kyodo news agency reported that the Japanese unit of Lehman Brothers Holdings Inc. has requested bankruptcy protection at a Tokyo court after the 158-year-old firm filed for Chapter 11 bankruptcy in New York on Monday.
The company, crippled by $60 billion in soured real-estate holdings, was unable to find an investment partner to throw it a lifeline despite a flurry of last-minute negotiations over the weekend.
Share prices in Tokyo fell across the board, with banking issues taking a particularly hard hit in the wake of Lehman's collapse. Investors unloaded shares in major Japanese banks listed as some of the biggest lenders, including Aozora Bank, Mizuho Financial Group and Shinsei Bank.
Japan's central bank issued a statement Tuesday that it will carefully watch the development and take appropriate measures to stabilize the market.
Downturns on the Australian and New Zealand markets were not as sharp as in some countries, in part because they had already absorbed some of the shock of Lehman and Bank of America news.
New Zealand Finance Minister Michael Cullen sought to reassure investors in his country but also warned that the turmoil may not be over.
"This is probably the worst financial crisis for a very long time ... that doesn't make it the same as the worst economic crisis," he told reporters. "The U.S. economy itself has continued to grow during the current year. The financial sector is in very serious difficulty and that has implications for the wider economy, but not what happened in 1929 to '31."
He said the latest round of turmoil in the United States "will tend to lower GDP forecasts for the world for the next year or two."