They said investors dumped shares across the board, but especially energy and banking stocks ahead of an expected interest rate cut later in the day.

The Stock Exchange of Thailand (SET) composite index lost 15.07 points to 668.88 points in morning trading, while the bluechip SET 50 index dropped 9.79 points to 469.42.

Economists said investors started to divest shares in the overpriced Chinese market after the mainland government failed to launch monetary policy to curb an overheating market.

But Thailand is expected to feel minimal impacts because share prices are already low after a series of local crashes over the last three months.

China's stock market plummeted from record highs Tuesday as investors took profits when concerns arose that the Chinese government may try to temper its ballooning economy by raising interest rates again or reducing more of the money available for lending.

"Corrections usually happen because of a catalyst, and this may be it," said Ed Peters, chief investment officer at PanAgora Asset Management.

"The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a kneejerk reaction with that kind of drop."

The Shanghai Composite Index tumbled 8.8 percent to close at 2,771.79, its biggest decline since it fell 8.9 percent on Feb. 18, 1997. Since Chinese share prices doubled last year as investors poured money into the market after the completion of shareholding reforms, trading in Shanghai has been very volatile. 

Earlier Japanese share prices opened sharply lower Wednesday with the benchmark Nikkei-225 index plunging 690.69 points or 3.81 percent to 17,429.23 within the first half hour of trading.

Most stocks on the first section of the Tokyo Stock Exchange opened lower as investors rushed to sell.

At one point the Nikkei index's fall reached 3.89 percent.

Chinese share prices opened Wednesday 1.35 percent lower after crashing 8.84 percent Tuesday in their biggest one day fall in 10 years, dealers said.

The benchmark Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, was down 37.35 points or 1.35 percent at 2734.59 in the first few minutes of trading.

Tuesday's crash -- which saw more than 800 companies close down by their daily limits of 10 percent -- was seen by some analysts as a key factor in causing world stock markets to fall sharply in the following hours.

Hong Kong share prices fell sharply Wednesday, down 3.58 percent in early trade.

The benchmark Hang Seng Index slumped 720.9 points to 19,426 in early trade.

The key Kuala Lumpur Composite Index plunged 101.07 points or 8.17 percent to 1,136.01 in the first minutes of trade.

Key blue chips saw heavy losses as spooked investors rushed to sell following an overnight slump on Wall Street, dealers said.

Wednesday's heavy falls followed a plunge of 2.81 percent Tuesday -- the biggest one-day fall in two years -- following falls in regional markets, they said.

South Korean shares opened sharply lower Wednesday as overnight losses in Chinese and US markets weighed heavily on the bourse, analysts said

The KOSPI index dropped 57.10 points, or 3.93 percent, to 1,397.50 in the first 15 minutes of trading.

Singapore share prices opened 4.82 percent lower Wednesday, in line with continued falls in regional markets.

The Straits Times Index opened down 155.89 points or 4.82 percent at 3,076.13.

Blue chips were among the big losers, including Singapore Airlines, down 4.32 percent and Singapore Press Holdings down 4.37 percent.

Philippine share prices opened 8.0 percent lower Wednesday on a knee-jerk reaction over tumbling Asian stocks, brokers said.

The Philippine Stock Exchange composite index opened 268.54 lower at 3,062.75.

The Stock of Exchange of Thailand lost 18.91 points or 2.76 per cent with the composite index dropping to 665.04 in Bt2.031 billion worth of trading.

The blue chip SET 50 index plunged 14.14 or 2.95 per cent to 465.07.

Australian share prices fell by more than two percent by noon Wednesday.

After plummeting more than three percent on opening, its biggest single-day fall in six years, prices recovered slightly as Prime Minister John Howard rushed to reassure investors that China and Australia's economies remained fundamentally strong.

At noon (0100 GMT), the benchmark SP/ASX 200 was down 2.28 percent at 5,857.2 while the broader All Ordinaries index had fallen 2.35 percent to 5,837.1, following the lead of Wall Street overnight.

The Nation/Agence France-Presse