Stock markets around the world suffered yesterday as deepening concern about the yen rebounded around Asia, with Hong Kong plunging to a five-year low. The Hang Seng Index fell 3.62 per cent to 6,779.95 points and the Japanese currency to an eight-year low against the United States dollar without any sign of intervention from Tokyo or Washington. Last night, global markets fell in response to Asia's instability as investors' concerns grew about the impact of the regional crisis on the world economy. The Dow Jones Industrial Average plunged on opening and by 2.50am (Hong Kong time) it was down 202.63 to 8,367.14, a drop of almost three per cent. In London, the FTSE 100 ended 154.8 points, or 2.8 per cent, down at 5,432.8, having at one stage been as low as 5,403.3. It was the index's biggest points fall of the year and was only lifted by the news of a US$110 billion (HK$851.3 billion) merger between oil companies British Petroleum and Amoco Corp of the US. Frankfurt's DAX index fell 3.8 per cent. Regional stock markets were also hit by a welter of bleak economic news from Singapore, Indonesia and Malaysia which indicated that these countries' problems were deepening. The Malaysian market slid more than five per cent to finish near a 10-year low while Philippine shares ended at a five-year low. The yen was trading at 147.10 to the US dollar last night, almost a yen weaker than Monday's close and well past its level in mid-June when US and Japanese central banks stepped in. Mainland officials repeated their pledge to defend the yuan, threatening speculators they would protect the currency with US$140 billion of foreign exchange reserves. But brokers said investors remained unconvinced that China and Hong Kong could withstand the economic pain of maintaining the current value of their currencies. Sun Hung Kai Securities executive director Gilbert Chu Kwok-tsu said: 'A lot of people are seeing the yuan and the Hong Kong dollar as the same thing. If one goes, they think then the other must go.' Value Partners assistant fund manager Norman Ho said: 'People are selling now and asking questions later - there's no confidence.' Yesterday's fall in Hong Kong follows last week's 11.56 per cent drop on the market as speculative attacks on the Hong Kong dollar prompted massive buying by the Monetary Authority on behalf of the Government. Interest rates jumped one percentage point as speculative interest in the Hong Kong dollar re-emerged after Monday's comparative calm. The authority said it was again actively buying the currency. Shares in HSBC fell 4.3 per cent to $155 while Sun Hung Kai Properties dropped 8.2 per cent to $22.90. HSBC chief economist Jan Lee said asset prices, including shares, were likely to continue to fall. He said investors were wrong to assume that Beijing would be forced to devalue its currency if the yen weakened past a critical level, therefore leading to a breaking of the link between Hong Kong's exchange rate and the US dollar. Investors were underestimating the 'pain threshold' of the leadership of China and Hong Kong which was not present in other Asian countries, which included Japan.