The MSCI index of Asia-Pacific stocks outside Japan fell 5.5 per cent to its lowest since October 2004.

The global emerging markets index was down 3.7 per cent to a near 4-year low, and its 35 per cent drop so far in October outpaced the 25 per cent decline on the all-country world index.

Japan's Nikkei share average slumped 5.5 per cent, having now fallen 21 per cent in October alone. Japanese exporters have been undercut by the persistent strength of the yen, which reduces their competitiveness. The yen hit a five-year high against the euro earlier on Thursday.

South Korea's KOSPI index fell 8.5 per cent, led by shares of Samsung Electronics and steel producer POSCO.

Hong Kong's Hang Seng index was down 4.7 per cent at the lowest since April 2005.

Some property stocks managed to gain after the Chinese government late on Wednesday announced policies to increase homeownership.

China Overseas Land's stock rose 2.1 per cent, despite a 6.8 per cent drop in mainland Chinese stocks listed in Hong Kong.

"Yesterday's move can be considered part of an overall effort to give a light stimulus to the economy, but in my view is primarily focused on the real estate sector. These changes also illustrate that the Party is capable of taking proactive steps to deal with a changing economic environment," said Andy Rothman, China macro strategist with CLSA in Shanghai.

"A good time to look at residential developer stocks," he said in a report.

YEN IN DEMAND

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