Shares in Japan, the Republic of Korea (RoK), China and Taiwan are down by 5 to 6 percent, having been shut on September 15 for a bank holiday.

The figures reflected earlier falls in Europe and the US, which on September 15 had its worst day's trading since September 11, 2001.

The fourth-largest US investment bank, Lehman filed for bankruptcy protection on September 15, becoming the latest victim of the global credit crunch.

Japan's benchmark Nikkei-225 index dropped by 4.8 percent in morning trading on September 16, the RoK shares shed 6.2 percent and Hong Kong's Hang Seng index fell 6.4 percent.

Markets in Shanghai, Taipei and Singapore were also sharply down, and the pattern was repeated in Australia and New Zealand, although the falls were smaller.

The collapse of Lehman, which had incurred billions of dollars of losses from the failing US mortgage market, threatened to deal a further blow to other financial institutions, as they unwind deals with the former investment giant.

Meanwhile, there are fears AIG, once the world's largest insurer, could also face collapse. It is taking steps to raise money amid reports it is seeking an emergency loan from the US Federal Reserve.

The US Federal Reserve has broadened its emergency lending scheme and the UK and European central banks have injected a total of US$39 billion into the financial system.