World stocks tumbled and oil fell 5% on Friday after the collapse of a $US14 billion rescue plan for American automakers and signs the recession in the United States is getting worse.
The US Senate failed to reach a last-ditch compromise to bail out automakers on Thursday, effectively killing any chance of congressional action this year which many say is necessary to prevent a further downturn in the already contracting economy.
Japan's benchmark stock index shed 5.6% on Friday. The Nikkei 225 stock average lost 484.68 points to close at 8,235.87. The broader Topix index was down 4.2% to 813.37.
The Australian stock market closed more than 2% lower on Friday following weakness in United States markets caused by doubts over the auto rescue package.
The benchmark S&P/ASX200 index fell 87.6 points, or 2.43%, to 3,510.4, while the broader All Ordinaries index lost 81.7 points, or 2.31%, to 3,452.5.
In New Zealand, the market was 49 points, or 1.8%, lower to 2676 on turnover of $56 million.
Top stocks all fell, with Fletcher Building down 13c to $5.70, Contact Energy down 9c at $6.78 and Telecom losing 8c to $2.32.
