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By VOA News
16 September 2008

Stock prices in Asia have plunged as turmoil in the U.S. financial sector continues to ripple across world markets.

A woman walks past a display showing stock prices in Hong Kong, 16 Sep 2008

Tokyo's Nikkei index closed down nearly five percent Tuesday, while Hong Kong markets were down nearly six percent in afternoon trading on news of Monday's major shakeup in the U.S. financial sector.

The bankruptcy of a major U.S. investment bank and other problems in the U.S. financial sector shook stock markets around the world Monday.

On Monday, some major European stock indexes plunged five percent at one point, while a key U.S. share index - the S&P 500 - was off by 4.7 percent at the close of trading.

Also on Monday, U.S. President George Bush said officials are working to "reduce disruptions" to the economy. He said U.S. financial markets are strong and flexible enough to weather the problems in the long run.

Mr. Bush spoke after the Lehman Brothers investment bank filed the largest bankruptcy in U.S. history. The move followed crisis talks over the last few days that failed to produce government backing for the company, which prompted potential buyers to walk away from the firm.

Meanwhile, the Bank of America agreed to acquire troubled U.S. investment bank and brokerage firm Merrill Lynch for $50 billion.

Investment banks arrange the sale of stocks and bonds for companies and often make major investments of their own.

In the case of Lehman, Merrill and insurance giant AIG, investments in risky mortgage-backed securities lost billions of dollars.