Gloom enveloped Asia’s markets for a fifth day with stocks sliding across the region despite attempts by central banks in Hong Kong and Australia to restore confidence.

The MSCI Asia-Pacific index of stocks outside of Japan was down 4.4 percent to a near 3-year low. The index has fallen a staggering 25 percent in a month and 46 percent so far this year, underperforming the MSCI all-country world index, which has fallen 36 percent year-to-date. Financial and raw materials shares contributed more than half of the fall in the index.

The pain began as soon as Australian shares opened, sinking 3.6 percent with banking shares among the hardest-hit and recording falls of between four and six percent as Britain’s crippled bank awaited a government lifeline.

The benchmark S&P/ASX 200 index was down 164.3 points by late morning at 4,454.4, holding above the three-year low that it plumbed a day earlier.

Australia’s central bank, which a day earlier stunned investors by slashing interest rates by 100 basis points, expanded the liquidity assistance it provides commercial banks in its money market operations.

With banks around the world hoarding cash and shying away from lending to each other, the Reserve Bank of Australia said it would accept more types of debt as collateral for loans and would lend to banks for longer periods. It will offer six- and 12-month repurchase agreements each day, essentially lending for longer periods.

Adam Donaldson, head of debt strategy at Commonwealth Bank, said: ”This is another positive step to help ease pressures in the money markets and banking system. The RBA is being very proactive. The longer term for repos will give banks more certainty in their funding, and that's very welcome."

The Hong Kong Monetary Authority announced a 100 basis point cut in its key interest rate, reducing the spread of its base rate – or discount window rate – to 50 basis points above the prevailing U.S. Federal Funds Target Rate – a de facto reduction. Hong Kong, a major global financial centre and a key investment gateway to China, typically follows U.S. rate moves because its currency is pegged to the U.S. dollar.

Chief Executive Joseph Yam said: "We hope the new formula could help stabilise the interbank rates in the long run and lower the pressure on banks to lift lending rates."

But, returning after a one-day holiday, investors continued to fret about the inability of such broad-stroke policies to end the global credit crisis. The Hang Seng index fell 5.4 percent to a 27-month low. Energy and other resource stocks were mauled by concern over slowing demand and the raging global credit crunch hit financials.

By late morning, the index was down 837.68 points at 15,966.08 after falling to 15,880.85 earlier, its lowest level since June 2006.

In Tokyo, the Nikkei share average lost 4.5 percent, hitting a fresh five-year-low and taking losses for the past five days to 15 percent. The benchmark Nikkei shed 460.78 points to 9,695.12 and at one point fell to its lowest since November 2003.

Kabuki Miyazawa, market analyst at Daiwa Securities SMBC Co. Ltd., said: “Amid deepening uncertainty over the course of the financial crisis and worries over a slowdown in the global economy, investors simply don't find incentives to buy stocks. Selling seems almost unstoppable because of uncertainty over the crisis.”

Fears about South Korea’s ability to weather the crisis sent shares in Seoul with banks falling across the board. The Korea Composite Stock Price Index was down 37 points at 1,329.31 points as of 0125 GMT, but up from the session's low of 1,317.83 points.

Most anxiety focused on the won, which slid as much as 4.2 percent to touch a 10-year low against the dollar. It fell to as low as 1,386.9, its weakest since Oct. 6, 1998 when South Korea was grappling with the 1997-1998 Asian financial crisis.

Stocks in Taiwan dropped 3.44 percent, hovering at a four-year low, as investors drew little comfort from a government assurance to protect local bank deposits.

And oil prices dipped below 90 U.S. dollars a barrel on concerns the financial crisis will weaken the outlook for demand as the global economy weakens.

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