Fitch cut Greece's credit rating to B-plus from BB-plus, adding to a series of negative events in the past week, which included Japan's worsening economic downturn and the potential for further interest-rate increases on the mainland, which is suffering from rising inflation.

The Hang Seng dropped below its 200-day moving average yesterday, which had been seen as a strong technical support for the market.

In Shanghai, the benchmark hit its lowest level since February 10, and analysts expected it to further drop to the 2,700-point level owing to a liquidity drain caused by a flood of initial public offerings.

'It is quite likely that the main indicator would soon fall below 2,700 points,' said Shenyin Wanguo Securities analyst Wei Daoke. 'The market sentiment is very weak and the downward trend is irreversible.'

Markets across Asia also fell yesterday with the MSCI Asia Pacific Index declining 2.2 per cent to 131.67 points, the lowest close since March 21.

But Andrew Freris, Asia chief investment adviser for BNP Paribas Wealth Management, said even if Greece were to default, it should have a minimal impact on Asian economies.

'If Asian banks are holding Greek debt, it's a tiny amount,' Freris said.

Elena Okorotchenko, managing director of sovereign and international public finance ratings at Standard & Poor's, said: 'We don't see any immediate impact on Asian sovereign ratings from the debt crisis in Europe. For Asia's sovereigns, we view the European debt crisis as secondary compared with Asia's prime challenges of inflation and volatile capital flows.'

In Shanghai, investors were convinced the central bank would further raise interest rates to contain inflation.

Eight listings will be launched in Shanghai this week, likely to raise 4.5 billion yuan (HK$5.38 billion) from the A-share market, 60 per cent more than the previous week.

4.5b yuan

The amount that eight A-share offerings this week aim to raise

Shanghai exchange had a market cap of US$2.7 trillion last year