However, during overnight London trading of Hong Kong stocks, the Hang Seng index dived another 300 to 450 points from the close in Hong Kong yesterday.

In all, the past 24 hours of trading in local stocks has seen more than 1,000 points knocked off the index since its opening yesterday in Hong Kong.

The Hang Seng Index lost 743 in Hong Kong, then another 324 overnight in London.

In volatile trading in London last night local stocks initially dropped to 10,975, down 9.7 per cent from yesterday's Hong Kong opening of 12,157, or 1,182 points, and down 439 points off Hong Kong's close of 11,414.

Despite a leap back up to 11,375, as brokers attempted to firm up bids on key stocks, institutions sold down the index, letting it drop to 11,075 points.

A mediocre attempt at a rally, taking the index to 11,250, fell flat and it slumped to below its initial drop in London, to a low of the day of 10,950.

The anaemic opening of equity trading in New York saw the Dow hover around the Friday close of 3,871.

Encouraged by New York's lack of direction the Hang Seng index in London, as followed by Robert Fleming, made a modest but uncertain recovery.

It rose some 300 points to within 150 points of the Hong Kong close before losing ground on fears of a possible sudden downward jerk in New York trading after London had closed.

In London the index closed down 324 points on the previous Hong Kong close at 11,090, still down more than 1,000 points.

Across Asia the shadow of the US interest rate rise triggered stock market dives.

There was concern that Friday's rise in US rates might cause higher regional interest rates and this threat might trigger a sell-off by foreigners shifting their money back home.

Investors were also bidding share prices down amid concern that stocks in New York would slide again yesterday.

In Tokyo, Asia's biggest market, the Nikkei average closed down 287.03, or 1.41 per cent, at 20,014.4.

Tokyo stocks, less sensitive to US markets than Asia's smaller regional exchanges, fared better, analysts said.

''Basically because Tokyo is driven by different factors compared to other Asian markets - which are driven just by US money coming in - Tokyo's declines are not as steep,'' one analyst said.

Rather than taking their cues entirely from the US market, investors in Tokyo had their attention focused on any hint of a Government agreement on a fiscal support package, traders said.

The unveiling of the package has been stalled by quibbling over a rise in consumption taxes to finance a proposed six trillion yen (about HK$430 billion) cut in personal income taxes.

In Thailand, share prices plunged 6.9 per cent, one of the biggest single-day losses ever, on concerns that the interest rate rise in the United States would slow economic growth and cause an exodus of foreign investors from the Thai market, analysts said.

The benchmark Stock Exchange of Thailand index closed down 99 points to 1344.81.

''People were in a panic,'' said Haydn Meadows, an analyst at Baring Research. ''It was definitely a case of over-reaction.'' ''People got spooked by what happened on the New York market on Friday,'' said Yongyot Wareesurahan, securities research manager for Nithipat Capital. ''If US interest rates are higher, than Thai exports may be lower.'' Many Asian markets, including Hong Kong, Seoul, Kuala Lumpur and Singapore, have a shortened week due to the Lunar New Year on Thursday and this may accelerate selling with investors hesitant to maintain large positions, traders said.

In Kuala Lumpur, another 1993 boom market, the KLSE composite index plunged 53.3 points or 4.65 per cent to end at 1,094.02.

Neighbouring Singapore took a 1.97 per cent fall. ''It would appear there is no panic selling as yet,'' said Julie Teo of DBS Securities, but she said much would depend on Wall Street.

To the south, Australian shares lost 2.22 per cent. ''It was played out much as it was thought to be - initial uncertainty, ordered chaos,'' said one Sydney broker.

A selling spree hit the wobbly Seoul market as government market-cooling steps came into effect.

The Finance Ministry last Wednesday revealed comprehensive measures aimed at cooling what it regarded to be an overheated stock market, which include doubling the cash deposit requirements when placing buy orders.

The Seoul composite stock index closed 27.72 points, or 2.94 per cent, lower at 914.88.

Jakarta and Manila also fell with the latter falling two per cent, but Taipei was a haven of peace. It had already closed for the Lunar New Year festival.

And in Bombay, share prices actually soared to a 21-month high with the index rising 224.24 points, or 5.72 per cent, to 4,141.81, as investors anticipated the Government would introduce more policies to open up the economy in this month's budget, analysts said.