I just read on the wire that “India’s Sensitive Index tumbled 2,029.05 points, or 11.5%, to 15,576.30 in the early minutes, forcing trade to be halted for an hour” which might act as an indicator that the US and European markets may well plunge when they’re opened in the morning. Hopefully, the automatic safe guards will prevent too much of a run in the market. Quite a few people believe that Martin Luther King, Junior, again has saved the day as his birthday on Monday kept the financial markets closed in the US, possibly protecting it from the worst of it. Via the New York Times

Asian stocks extends losses into a second day

By V. Phani Kumar , MarketWatch

Last Update: 11:51 PM ET Jan 21, 2008

HONG KONG (MarketWatch) — Asian stocks came under relentless selling pressure for the second straight session on Tuesday, a day after fears the U.S. economy could slip into a recession triggered a sell-off that spread to Europe and Latin America.

India’s Sensitive Index tumbled 2,029.05 points, or 11.5%, to 15,576.30 in the early minutes, forcing trade to be halted for an hour. The index had finished 7.4% lower in the previous session, after dropping as much as 11% during the day.

“It doesn’t look good at all. We expected it to fall, but nobody expected this kind of correction,” said Sharmila Joshi, a trader with Prabhudas Lilladher in Mumbai.

Japan’s Nikkei 225 average tumbled 4.8% to 12,682.47, while the broader Topix index skidded 4.6% to 1,233.99 in afternoon trading. Earlier in the day, the Nikkei dropped as low as 12,666.09 — its lowest level since September 2005.

Hong Kong’s Hang Seng Index slumped 8% to 21,914.28 as the sell-off deepened from the previous session, when it tumbled 5.5%. The Hang Seng China Enterprises Index plummeted 11.9% to 11,927.55. See related story.

Australia’s S&P/ASX 200 extended losses into the 12th straight session, slumping 5.8% to 5,257.80 and New Zealand’s NZX 50 index ran its losses into the 14th session, dropping 1.1% at 3,607.13, while South Korea’s Kospi shed 4.8% at 1,602.93.

China’s Shanghai Composite, which fell more than 5% in the previous session, sank 4.1% to 4,714.30, Taiwan’s Weighted index tumbled 6.4% to 7,585.93 and Singapore’s Straits Times index lost 4.4% at 2,789.31, while Indonesia’s JSX Composite tumbled 8.3% to 2,279.27.

Tim Rocks, regional strategist for Macquarie Research, said investors were likely to worry about the impact of a U.S. economic slowdown on exporters in Asia.

“Whenever you have got any kind of disappointment in global growth, you always have big downgrades across Asia and particularly in the export-dominated markets,” said Rocks. “On a six-month view, we’re still going to have a lot of earnings downgrades in Asia, linked to the U.S. cycle.”

Rocks said hopes of interest rate action from the U.S. Federal Reserve is “the next great hope for the markets now,” adding that an interest rate cut by the Fed would “certainly be a break for the markets.”

Regional detail

Financials came under selling pressure across the region, with shares of Mizuho Financial Group (8411)(MFG) sinking 4.5% in Tokyo, Macquarie Group (MQG) slumping 9.2% in Sydney and Kookmin Bank (KB) shares dropping 3.4% in Seoul.

In Hong Kong, shares of market heavyweight HSBC Holdings (5)(HBC) tumbled 6.2%, while Singapore’s DBS Group Holdings shed 4.6%.

The decline in crude oil and metal prices hurt resource stocks as well, with Woodside Petroleum (WPL)(WOPEY) plummeting 8.3% and Rio Tinto (RIO)(RTP) slumping 9.2% in Sydney, while shares of commodities trader Marubeni Corp. (8002) dropped 5.6% in Tokyo. In Hong Kong, shares of PetroChina Co. (857)(PTR) plummeted 10.8% and Aluminum Corp. of China (ACH)(2600) stumbled 12.1%, while in Seoul, Posco (PKX) shares dropped 3.2%.

Japanese exporters also ranked among losers in Tokyo, with shares of Toyota Motor Corp. (7203)(TM) dropping 4.6% and Sony Corp. (6758)(SNE) fell 5.1% on concerns over the yen’s rally recently.

In currency trading, the U.S. dollar gained 0.6% to 106.29, recovering some of its recent losses against the Japanese currency, while the Australian dollar rose 0.3% at 91.52 yen.

Crude oil prices fell below the $90 a barrel level in electronic trading on worries related to U.S. demand. February futures of the commodity were recently $2.06 lower at $88.51 a barrel.

In the previous session, European stocks suffered their largest one-day decline since Sept. 11, 2001, with the pan-European Dow Jones Stoxx 600 index ending down 5.4% at 309.67 on heavy losses in banks and insurance firms.

In Canada, the S&P/Toronto Stock Exchange composite index sank 604.98 points, or 4.7% to end at 12,132.14. Brazil’s Bovespa sank 6.6% to 53.694, while Mexico’s Bolsa index fell 4.8% to 25,444. See related story.

U.S. markets are closed Monday for the Martin Luther King Jr. Day holiday.

Varahabhotla Phani Kumar is a reporter in MarketWatch’s Hong Kong bureau.