Asian stock markets stabilising after deep dives

Asian stocks markets are stabilising after a day of dramatic plunges today as futures point to a measure of calm returning to Wall Street following the Dow's sixth worst decline in the last 112 years.

To be sure, investors remained on edge amid fears of a possible global recession. But by mid-afternoon, major Asian indexes had pulled back from a dizzying tailspin earlier in the day.

South Korea's Kospi was off 3.6 per cent at 1,801.35 after plummeting nearly 10 per cent in the morning. Hong Kong's Hang Seng, which fell as much as 7 per cent, was down 2.9 per cent at 19,890.85 and Japan's Nikkei 225 stock average pulled back to a fall of 1.7 per cent.

Australia's S&P/ASX 200 index moved into positive territory up 1.2 per cent at 4,034.80 and mainland China's key indexes eked out modest gains.

The big moves, which added to sharp losses in the past few days, came after the Dow Jones industrials fell 634.76 points on Monday. It was Wall Street's first day of trading after Standard & Poor's downgrade of the US credit rating which jolted the global financial system and reinforced anxiety that the US economic recovery is stalling.

Futures suggested US stocks might eke out slight gains today. Dow futures were up 6 points, or 0.1 per cent, at 10,730 and broader S&P 500 futures added 1 point, or 0.1 per cent, to 1,112.30.

"It's still very hard to predict how the US market will do," said Jackson Wong, vice-president of Tanrich Securities in Hong Kong. "When the dust settles, if the situation doesn't get worse in the US or Europe, the situation will rebound. But the US has to stabilise."