By JIMMY CALAPATI and ALBERT CASTRO

Asian stocks plummeted, led by an 11 percent drop on Japan’s Nikkei, and oil prices dropped to a one-year low yesterday following another rout in Wall Street which posted a $1.1 trillion in paper losses.

Major European stock markets are expected to open down as much as 5.9 percent, according to financial bookmakers.

Wall Street had its worst day since the 1987 stock market crash on Wednesday, the Nasdaq has now wiped out all of its gains from Monday’s 11 percent rally, while the benchmark S&P 500 is up only about 1 percent from Friday’s close.

The Dow Jones industrial average slid 733.08 points, or 7.87 percent, to 8,577.91, while the Standard & Poor’s 500 Index tumbled 90.17 points, or 9.03 percent, to 907.84.

The Nasdaq Composite Index sank 150.68 points, or 8.47 percent, to 1,628.33.

The broad Dow Jones Wilshire 5000 closed down 905 points, or 8.99 percent, at 9,160.43, representing a paper loss for the day of approximately $1.1 trillion.

The Philippine Stock Exchange index slumped 116.04 points to 2,122.37, a 5.18 percent drop. Losers swamped gainers 119 to 5 Trading reached P2.32 billion.

The drop brought the Exchange’s combined market capitalization to P5.33 trillion, less P177.92 billion from yesterday. Since last week, the market has shed P278.24 billion.

Most actively traded Philippine Long Distance Telephone Co., (PLDT) was down P115 to P2,275. Ayala Corp., shed P12.50 to P245.

Ayala Land Inc. shed P0.50 to P7.10. Bank of the Philippine Islands lost P1 to P40.50. Megaworld Corp., shed P0.09 to P0.99

The peso skidded past 48 to the US dollar, closing at 48.10, the lowest since April last year.

The peso was 49 centavos lower than Wednesday’s close of 47.61.

Total trading reached $991.50 million. The peso took an early morning beating as it opened 14 centavos weaker at 47.75 against the dollar.

Sellers dominated the foreign exchange market as risk-averse investors fled in search of safer investment grounds, Marcelo Ayes, senior vice president at the Rizal Commercial Banking Corp. said.

"It’s due to market’s renewed concern on US recession," Ayes said.

Jonathan Ravelas, market strategist at Banco de Oro Unibank also said that there is renewed risk aversion in the market.

"This may push peso weaker towards the P50 level," Ravelas added.

According to Ayes, investors have to sell stocks while the negative data that came out in the US on high unemployment and weak consumer confidence also contributed to the downfall.

"There has been a relapse of risk aversion. The global economy is weakening and this indicates lower income and maybe even losses in the future," Ayes said in a phone interview.

Ayes added that the news on remittance is improving, but that alone can’t help to support the peso.

He added that the outlook for the peso may now range between 47.80 to 48.35.

Ayes explained that funds are all headed to the United States and Europe as their federal banks’ liquidity push provides a degree of confidence to investors.

"This is really risk aversion. All emerging markets (like the Philippines) will be hit and the funds are siphoned by the US and Europe because it is safer. Credit-wise, there is less risk," he added.

"I think today there is just a combination of uncertainty and deleveraging in the market," said Amar Gill, head of thematic research at CLSA in Singapore.

"International funds are pulling back and putting their money into whatever is safest: Treasuries or cash or paying off existing debt," he said.

Market ructions as investors flee from almost any form of risk have weighed on the global economic outlook, which has fed back into markets in a damaging circle.

The Nikkei share average plunged 11.4 percent, the largest single-day decline since the 1987 stock market crash.

Hong Kong’s Hang Seng index fell 7.6 percent, with the biggest losses racked up by commodity-related companies, such as Shenhua, China’s top coal producer. South Korean stocks had their third biggest fall ever, down 9.4 percent and the won dived 9.7 percent, its biggest fall since 1997.

Some investors were trying to find value amid the selling.

Even the most deft investors have been flipped by the ferocity of selling and risk reduction in markets. Citadel Investment Group, one of the world’s largest hedge funds, said September was the single worst month in the history of the company and warned of more volatility in weeks to come.

Hedge funds have had to liquidate their holdings to raise cash to meet margin calls and redemptions. The resulting selling has exacerbated price action in the market, money managers said.

US government debt prices were relatively steady, a notable change compared with previous sharp selloffs in the stock market that have led to solid demand for Treasuries.

Investors may need to raise cash by selling Treasuries, keeping prices in check. In addition concerns about heavy new issuance to fund bank rescue packages may also be weighing on Treasuries, traders said.

The benchmark 10-year note dipped 2/32 in price to yield 3.959 percent, up 1 basis point from late US trading on Wednesday.

The two-year note was steady in price to yield 1.568 percent.

The US dollar benefited from a rush out of risky assets, especially emerging market currencies such as the won.

The euro fell 0.5 percent to $1.3389, edging back toward a 1- year low of $1.3258 hit on trading platform EBS on Friday.

The dollar rose 0.6 percent to 100.23 yen, pulling away from a six-month low of 97.91 yen hit on Friday.

Anticipation of much slower growth and thereby reduced demand knocked raw materials prices.

The November US light crude future fell for a third day to a new 13-month low of $72.22 a barrel on Thursday, down 3.25 percent. London copper fell 7.6 percent to its lowest since 2006. (with reports from Reuters)