European markets enjoy modest bounce at the open

The country’s main index, the Kospi, ended the day 1.4% lower. Hong Kong’s Hang Seng fell 1.2 percent to 18,319.58. The index posted a loss of 5% for the week.

The flight from risk told on most Asian shares, with Hong Kong – a favorite channel for global investors to play China – diving 4.2 percent as investors there returned from the long Lunar New year holidays.

Stocks lost further ground Friday following the yen’s sharp ascent and overnight plunges in stock markets overseas, with the benchmark Nikkei average closing below 15,000 for the first time in almost 16 months. The Kosdaq benchmark was down 6.1%. A stronger yen will hurt the profits of Japanese exporters, whose planning has been premised on a much weaker level of about 118 yen to the dollar, analysts say. France’s CAC 40, meanwhile, advanced 1.67 percent.

Japan’s Nikkei share average closed at its lowest level since October 2014 on Wednesday as worries about the health of global banks and economic growth intensified.

The Nikkei’s woes, coupled with the yen’s surge against the U.S. dollar, has raised speculation that Japan is preparing to intervene to arrest the yen’s rise. The stock gained $8.03 to $67.72.

In Tokyo, Japan’s Mitsubishi UFG Financial Group fell 2.2 percent and Mizuho Financial Group Inc. sank 3.7 percent.

“The adoption of negative interest rates reeks of desperation to me”, Mr Wang said.

“Market cap of banks are big”.

Concerns for private bank’s valuations following ballooning holdings of debt that can’t be written off, affecting banks on both sides of the Atlantic, has sparked a 2008-like fear of an impending financial crisis, which Friday saw financial issues in Asia, including on bourses in Tokyo, take a pummeling. “It’s hard to imagine the broader market indices going up on this”, he said.

Major central banks including the European Central Bank, the Bank of Japan and the Swiss National Bank have all adopted negative rates to boost inflation.

Jonathan Loynes, chief European economist at Capital Economics, says the downside risks have increased and as a result he thinks the European Central Bank will back “further decisive policy support” at its March meeting. This is the best option given the turmoil in Japanese markets and the strength of the yen, he said in a research note.

The currency last stood at 112.22 yen, hardly showing any reaction after Japanese Finance Minister Taro Aso stepped up his verbal intervention on Friday, saying he would take appropriate action as needed. He said he would watch foreign-exchange markets with close interest.

The yen and government bonds tend to appreciate in times of economic uncertainty.

The 10-year U.S. Treasuries yield fell to as low as 1.530 percent US10YT=RR , a low last seen in August 2012, which is just before the Fed started its third round of quantitative easing.

Concerns that the upheaval that has wracked world markets will now seep into the U.S. economy, the world s biggest, is adding to selling and financial stocks – particularly banks – are coming under intense pressure.

Still, he said “the tone in Asia has generally been downbeat”.

US crude futures rose to $27.44 per barrel, up 4.7 percent from late USA levels, helped by comments from an OPEC energy minister sparking hopes of a coordinated production cut.

MORTGAGE HANGOVER: Morgan Stanley fell 4 percent after it agreed to pay $3.2 billion to settle federal and state claims that the lender engaged in practices that contributed to the 2008 financial crisis, including misrepresentations about the value of mortgage-backed securities.

Following hot on the heels of broad-based declines in Asia, the Stoxx 600 index of European shares was down 3.7 per cent at 303.7. “The market is saying we re anxious no matter what Yellen says”.

Dominique Fong, Alastair Gale and Robb M. Stewart contributed to this article.