Oct. 10 (Bloomberg) -- Asian stocks tumbled, driving Japan's Nikkei 225 Stock Average to its biggest weekly decline on record, on concern the deepening credit crisis will push the global economy into a recession. The yen surged.

ICICI Bank Ltd., the Indian bank that's reported the biggest losses on overseas investments, sank 15 percent and Mitsubishi UFJ Financial Group Inc. plunged 8.5 percent. Neptune Orient Lines Ltd. fell 11 percent in Singapore on concern the region's exports will slow. BHP Billiton Ltd., the world's biggest mining company, lost 7 percent after commodities slumped. Indonesia's stock exchange suspended trading for a third day.

``It's pure panic,'' said Ivan Tham, Singapore-based head of funds management at state-backed Kuwait Finance House, which has about $24 billion in assets. ``You're seeing companies start to fail because they can't refinance. Good companies are being sold down aggressively with the bad.''

The MSCI Asia Pacific Index lost 6.4 percent to 86.42 as of 7:12 p.m. in Tokyo. The measure has dropped 17 percent this week, the biggest slump since the index was created on Dec. 31, 1987. The index, down 45 percent this year, now trades at 10 times estimated earnings.

The yen rose to 99.39 per dollar, up 6 percent this week, the most in a decade as investors cut holdings of higher-yielding assets funded in the Japanese currency.

Japan's Nikkei plunged 9.6 percent to 8,276.43. The gauge slumped 24 percent this week, the steepest decline since 1949, when data began. Hong Kong's Hang Seng Index lost 7.2 percent, capping a 16 percent weekly plunge. That's the most since January 1998.

Trading Halt

Australia's S&P/ASX 200 Index tumbled 8.3 percent, the most since the October 1987 crash, led by National Australia Bank Ltd. Trading was suspended for 30 minutes on Thailand's SET Index, triggered by a 10 percent slump. Taiwan is closed for a holiday.

More than $6 trillion has been wiped from global equities this week even as the U.S. Federal Reserve and other central banks from London to Hong Kong cut interest rates after the yearlong credit-market crunch spurred concern banks will run short of capital.

``The 1987 crash was over in a day or two, but this one is like a death by a thousand cuts,'' said Brian Ingham, a fund manager at Sydney-based Nucleus Global Investors, which invests in global utility and infrastructure stocks. ``We've now entered the point of unreality where I'm almost immune to what I'm seeing.''

U.S. stocks tumbled yesterday, with the Dow Jones Industrial Average closing below 9,000 for the first time since 2003.

Banks Plunge

ICICI Bank, India's second largest, fell 17 percent to 375.25 rupees, the most since its trading debut in September 1997. Joint Managing Director Chanda Kochhar's said that the bank has adequate amounts of capital and ``small exposure'' to overseas investments and loans.

Mitsubishi UFJ, Japan's biggest bank, lost 8.5 percent to 710 yen, capping a 20 percent decline this week, after Moody's Investors Service said it may cut Morgan Stanley's credit rating. The Japanese lender is in talks to buy a stake in Morgan Stanley.

Sumitomo Mitsui Financial Group Inc., Japan's second-largest bank by market value, fell 8.2 percent to 552,000 yen. National Australia, the nation's biggest bank, slid 12 percent to A$20.80. HSBC Holdings Plc, the largest in Europe, dropped 7 percent to HK$109.80 in Hong Kong.

Credit-Market Seizure

Money markets rates continued to rise even after a raft of cuts in borrowing costs by global central banks. The cost of borrowing in dollars for three months rose as high as 5 percent today, according to Charles Diebel, head of European rates strategy at Nomura International Plc in London.

The corresponding rate in Tokyo increased to the highest since March 1998 even as the Bank of Japan added more than $30 billion to the banking system. The Libor-OIS spread, a gauge of cash scarcity, climbed to a record 359 basis points. Hong Kong's three-month interbank offered rate rose to the highest in a year.

``It's very hard to call the bottom,'' Daniel Miller, who helps manage $30 billion as vice president and head of institutional equities at Gamco Asset Management Inc., said in Manila. ``The Fed lowered the rate by half a point and other central banks joined but no one cared. It will take something more than that and nobody's sure what that is.''

Mitsubishi Estate Co., Japan's second-biggest real-estate company, lost 8.1 percent to 1,642 yen after New City Residence, a Tokyo-based real-estate investment trust, filed for credit protection. Mitsui Fudosan Co., the largest, slipped 6.8 percent to 1,575 yen.

Insurers, Shipping Lines

T&D Holdings Inc., the country's largest publicly traded life insurer, dropped 11 percent to 4,220 yen after while Yamato Life Insurance Co. became the nation's first bankruptcy in the industry in seven years.

Neptune Orient tumbled 11 percent to S$1.59, the steepest decline since Nov. 11, 2003. STX Pan Ocean Co., South Korea's largest bulk-shipping line, declined a record 19 percent to S$1.09 in Singapore. Mitsui O.S.K. Lines Ltd., operator of Japan's largest fleet of iron-ore carriers, fell 7.8 percent to 577 yen.

The Baltic Dry Index, a measure of commodity-shipping rates, dropped 9.4 percent yesterday in London, bringing this year's plunge to 73 percent.

BHP, Australia's largest oil producer, slid 7 percent to A$27.74. Rio Tinto Group, the world's third-largest miner, dropped 6.4 percent to A$73.

Crude oil tumbled as much as $4.52 a barrel to $82.07, headed for its biggest weekly decline since December 2004, pacing a slump in commodities. Copper traded at its lowest since March 2006.

The risk of companies defaulting on their debt rose. The Markit iTraxx Asia index of 20 high-risk, high-yield borrowers outside Japan advanced 160 basis points to 950, according to Barclays Capital. Five-year contracts on South Korean government debt rose 30 basis points to 330.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Chua Kong Ho in Shanghai at kchua6@bloomberg.net.

Last Updated: October 10, 2008 06:29 EDT