The peso and stock markets tumbled yesterday, joining the global meltdown as investors flee the equities and currency markets to the more stable bond, fixed income market.

The Philippine Stock Exchange index skidded 5.5 percent while the peso retreated to 41.60 against the US dollar, a three week-low.

Worldwide, investors feared a US recession could derail global economic growth, and a sharp drop in US stock index futures pointed to heavy selling in New York when it opens for Tuesday trade.

Share markets from Tokyo to Sydney slumped 5-7 percent, with the Australian market suffering its worst-ever one-day fall, and India’s benchmark Sensex crashed more than 11 percent, triggering a trading halt.

Billionaire investor George Soros said the world was facing the worst financial crisis since World War Two and the United States was threatened with recession.

"We really do have a serious financial crisis now," Soros told Austrian daily Standard in an interview.

"It’s like a funeral in here," said Ken Masuda, senior equities dealer at Shinko Securities in Tokyo. "No one knows what’s going to happen tonight in New York. It’s like we’ve gone blind, you don’t know what’s coming.

"Until we see New York, all we can do is sell," he said.

US stock index futures fell around 4.5 percent, signaling a sharp sell-off on Wall Street later.

Here in the Philippines, share prices were down 5.51 percent, the third highest daily drop in history. The first was a 8.33 percent bloodbath during the Asian crisis, followed by another 7.9 percent last February.

The Philippine Stock Exchange index lost 173.89 points to 2,978.41.

Foreign funds have dumped as much as P9.48 billion from the start of the year. Yesterday foreign funds were netsellers by P400 million.

It was a bloodbath yesterday with 150 losers against six gainers.

Trading turnover was at 3.03 billion shares for P4.37 billion.

Some P2 billion worth of Meralco shares were also crossed.

"The nightmare continues. It’s really a global slump and we’re part of that ring," said Astro del Castillo, First Grade Holdings, Inc. managing director.

Del Castillo said investors were prompted of "fears of the unknown because of possible weaker economy in the US."

"If Global market declined and we cannot deny the fact that we are part of global economy. Fund managers are consolidating position and going back to drawing board and making their strategies," he added.

Claire Quiray, Accord Capital Equities, Inc. analyst said the fear is rooted on the lack of clear direction how the US government intends to address its recession concerns.

" There is no exact plan. The intentions are there but as to pin down and how to address the issue it is not clear," said Quiray.

Quiray noted that with 50 percent of the market’s turnover contributed by foreign funds, it is very hard not to be influenced by overseas sentiments.

The recent market drop meanwhile has made the market oversold and ripe for potential technical bounce in the next trading session.

Quiray said pegged the market’s support at 2,880.

Among those who posted a 52-week low were SM Investments, Inc., First Philippine Holdings, Inc., First Gen Corp., Filinvest Land, Inc., Philippine National Bank, Rizal Commercial Banking Corp., Robinsons Land, Corp., and Union Bank of the Philippines, among others.

SM Investments was down P20 to P267.50.

First Holdings was down P5 to P51. Unit First Gen was down P4.50 to P46.

Filinvest Land was down P0.14 to P1.08.

Philippine National Bank was down P3 to P38.

Rizal Commercial Banking Corp. was down P1.75 o P19.

Robinsons Land was down P0.50 to P11.50.

Union Bank was down P2.50 to P32.

The South Korean won, Philippine peso and Indonesian rupiah were leading the drop in currencies.

The flight from risky, higher-yielding assets pushed the Japanese yen higher, to a 2-1/2-year peak against the dollar, as market participants braced for the possibility the US economy is close to a recession and showed their disappointment at US President George W. Bush’s fiscal plans to shore up the economy.

The Peso fall is not really due to stocks but mainly global risk aversion on emerging assets," a trader in Manila said.

The Indonesian rupiah, Asia’s high-yielder, also shed half a percent, while other Asian currencies had smaller losses.