Southeast Asian currency and stock markets sank further into gloom yesterday, with Malaysia once again leading the region lower. The ringgit weakened and Kuala Lumpur's composite stock index fell 3.35 per cent, dragging down the Singaporean and Indonesian markets. Malaysian markets had been eagerly awaiting some new announcements due on Wednesday night from Deputy Prime Minister Anwar Ibrahim as to how he intended to cut the country's yawning current account deficit. When that failed to inspire investors, an overnight dive on Wall Street served as the perfect excuse to launch a selling wave. 'Overall sentiment remains weak, so you don't need very much negative news to make the markets fall again,' said Jimmy Koh, regional economist at Independent Economic Analysis in Singapore. Events in the United States proved painful not so much because of the size of the fall on Wall Street, but because of its nature. The Dow Jones Industrial Average fell 1.69 per cent on news that Goldman Sachs & Co was forecasting weaker than expected third-quarter earnings for IBM. The earnings downgrade struck an ominous chord in Singapore. About 15 per cent of the city-state's gross domestic product (GDP) is derived from the electronics sector. Singapore's Straits Times Industrials Index dropped 0.8 per cent to 1,927.68 points. Jakarta's index fell 3.2 per cent at 556.136 points, while Malaysia's KLSE Composite Index shed 3.35 per cent to close at 834.17 points. Thailand managed a gain, with the benchmark SET Index closing 1.9 per cent higher at 552.09 points. Mr Anwar spoke to Malaysian bankers on Wednesday to reassure them on the government's new austerity campaign, a move the market has been waiting for. Investors were encouraged by further news of the government's efforts to narrow its trade gap by delaying a number of large infrastructure projects, but said Mr Anwar lacked detail. Some also took his new economic forecasts with a pinch of salt. Mr Anwar predicted 8 per cent GDP growth and a current account deficit trimmed to 5 per cent of gross national product this year and 4 per cent next year. Economists pointed out that countries' trade gaps normally got worse before they got better after a devaluation, suggesting the benefits probably would not be seen until at least next year. Traders said US hedge funds used weaker stock markets as an excuse to set off a renewed round of US dollar buying against regional currencies yesterday. Coupled with this was heavy US dollar buying by Japanese corporates needing to repatriate earnings made in the region in time for half-year book closing. They normally do this in September, but this year have started earlier. The ringgit weakened to a low of M$2.955 to the US dollar before recovering to $2.93 in late trading. The Singapore dollar fell to S$1.51, while the Indonesian rupiah eased to 2,935 against an opening of 2,915.