Investors bailed out of a recent rally yesterday as Hong Kong stocks led a regional retreat after fresh setbacks in the United States vehicle and banking sectors signalled that the worst may be yet to come in the financial downturn. The Hang Seng Index dived 663.17 points or 4.7 per cent to 13,456.33 for its largest one-day drop in three weeks. Even worse hit, the H-share index fell 581.13 points or 6.85 per cent to 7,900.09. Stocks had opened sharply lower on news that the White House ousted General Motors Corp's chief executive and also set more stringent funding conditions for the country's leading carmakers. And after highlighting an improvement in business for the first two months of the year, the leaders of JP Morgan and Bank of America Corp spooked the market by saying that March had been more difficult. The Hang Seng Index last Friday finished its best week since October last year and had surged 18.44 per cent over the past three weeks before yesterday. But skittish investors wasted little time cashing in their gains, sending the benchmark crashing through the key 14,000-point level. 'It caught everybody by surprise [after] the Hong Kong market was able to hold pretty well last Friday,' said Andrew To, a sales director at Taifook Securities. 'The bears fought back after three weeks of having the lower hand.' Japan's Nikkei-225 Index was also battered, dropping 4.53 per cent after data showed that industrial and vehicle production output slumped last month. Taiwan slid 3.43 per cent, South Korea dropped 3.24 per cent and Indonesia fell 2.98 per cent. However, after the White House revealed plans for a restructuring of the vehicle industry and ousted General Motors chief executive Rick Wagoner, world stocks took a beating. The Dow Jones Industrial Average fell 3.39 per cent or 296.96 points and the Nasdaq Composite Index lost 44.87 points or 2.9 per cent in midday trade in New York. The S&P 500 Index slid 3.31 per cent or 27.01 points. In Europe, London closed down 3.49 per cent, Paris dropped 4.27 per cent and Frankfurt slid 5.1 per cent. Main board turnover in Hong Kong tallied HK$51.53 billion as investors came off the sidelines to take profits during the month's last trading day for futures contracts. 'When you have this bottoming out of a market you have a fight between the bulls and the bears,' said Mark Mobius, an executive chairman of Templeton Asset Management. 'People who lost money are angry and they want to get out.' Investors were eager to cash out after Aluminum Corp of China (Chalco) reported dismal results for last year and said it would lose money this quarter. Fourth-quarter profits for China Construction Bank Corp also surprised on the downside. Chalco dropped 11.97 per cent while Construction Bank slid 9.57 per cent. CNOOC and PetroChina dropped 6.24 and 6.17 per cent respectively after crude oil futures fell for the third time in four sessions. Crude prices dropped to US$50.40 at one point in electronic trading in New York. Banking giant HSBC Holdings edged down 2.51 per cent to HK$42.70, declining for the third time in the past four trading days. Its rights shares fell 6.73 per cent to HK$14.42. In London, the shares closed 7.95 per cent lower at 370.5 pence (HK$40.69) while the rights dived 21.17 per cent to 115 pence. In New York, the American depositary receipts were down 6.1 per cent at US$26.64 at midday. 'It's normal to see investors cash in their profits after a 20 or 30 per cent return in a few weeks,' said Matthew Kwok, the head of research at Tanrich Financial Holdings. 'The sell-off might continue for some days.'