For the second day in a row Seoul led the regional market declines with a 5.4-per cent tumble, followed by Manila which fell 3.8 per cent. Hong Kong dropped 3.1 per cent and Singapore took a 1.7-per cent dip. Profit-taking pulled Tokyo down 0.6 per cent, Sydney inched down, Bangkok fell 2.4 per cent partly on rumour that the finance minister had resigned, Taipei ended 1.6 per cent lower and Auckland closed down 1.2 per cent. Shanghai B-shares fell to a record-low close.

Dealers said renewed speculation of a Chinese devaluation, the spectre of financial trouble spreading in Latin America in the wake of Brazil, an overnight dip on Wall Street and domestic concerns conspired to pull the markets down.

In Hong Kong, stocks plunged below the key 10,000-point level, with the blue-chip Hang SengIndex ending off 310.05 points at 9,738.52. Dealers said rumours had been swirling around the market about a Chinese devaluation as it is the only remaining major emerging economy not to have let its currency weaken.

"Talk is enough (to push stocks down) when sentiment is already in the doldrums," said Howard Gorges, vice chairman of South China Brokerage. "It (devaluation) really is pretty unlikely," he added.

Concern over local banks exposure to China's window investment firms following the high profile collapse of several firms in the southern province of Guangdong, coupled with higher local interest rates also weighed on the market.

Japanese stocks fell 0.6 per cent as foreign investors led a late wave of profit-taking following gains on optimism that Japan's banking sector was heading toward stability, brokers said. High-tech and leading bank issues were sold to lock profits on recent gains while the lack of buying support from public funds also discouraged investors, brokers said. "Buying onprospects that the bank-rescue scheme would work has reached the limit in a technical sense," said Daiwa Securities equity manager Mayumi Araki. "There are also persistent financial worries over certain banks."

The Nikkei-225 leading issues lost 91.02 points to finish at 14,154.40, reversing a 55.12-point rise in the morning session. The Topix index of all issues on the first section of the Tokyo Stock Exchange was down 7.63 points at 1,097.29.

"Investors took profits toward the close as they became wary of upside risks after the market advanced for the sixth straight session in terms of futures," said Tsuyoshi Segawa, chief equity dealer at New Japan Securities.

Singapore's benchmark share index closed 1.7 per cent lower in line with other bourses in Asia, where sentiment was affected by worries over China and Latin America, dealers said. "Everybody is wary especially after having witnessed how fast it (Latin American contagion) spread in Asia. Also if there are problems in South America, that woulddivert fund inflows from Asia," he added. The Straits Times index ended 25.31 points down at 1,478.75. The broader All-Singapore index dropped 3.14 points to end at 398.73.