TOKYO - Asian stocks fell sharply Thursday as investors worried about the worsening global economy, despite continued efforts by governments to ease the financial crisis.

Markets ignored signs that the credit crunch may be easing and focused instead on the risk of a global recession, which could slash company profits, lead to rising layoffs and cut consumer spending.

"The economy is likely to slump in the next few quarters so corporate profits should be squeezed. The fundamentals are quite negative still," said Tomoko Fujii, head of economics and strategy at Bank of America in Tokyo.

Sydney finished 4.4 percent lower while Hong Kong lost 4.6 percent by midday. Worst hit was Seoul, which ended down 7.4 percent.

"Escalating concern about a global recession has prompted investors to bail out of growth-sensitive assets," said NAB Capital analyst Robert Henderson.

While the outlook for the major economies is hardly rosy, "the picture is even uglier for emerging economies," he warned.

Stocks dived more than 10 percent on the Argentine and Brazilian markets Wednesday.

The White House announced it would host a summit of the leaders of the Group of 20 rich and emerging nations on November 15 to try to coordinate efforts to counter the worst financial crisis since the Great Depression in the
1930s.

In Japan Prime Minister Taro Aso urged investors not to overreact to the fresh drop.

"When it comes to stocks, you shouldn't be upbeat one day and fret the next," he said. "What's important is that companies whose stocks you own perform well on an operating level."

But with the business climate rapidly worsening, electronics giant Sony Corp. issued a profit warning after the market close, saying net profits would more than halve this year due to a stronger yen and global economic slowdown.

US stocks plummeted Wednesday on global recession worries, grim corporate outlooks and falling oil prices.

The Dow Jones Industrial Average lost 5.69 percent while the broad-market Standard and Poor's 500 slid 6.10 percent to a five-year low.

European markets also fell heavily Wednesday as a blunt recession warning from British Prime Minister Gordon Brown cast a shadow over trading.

"We must now take action on the global financial recession which is likely to cause recession in America, France, Italy, Germany, Japan and - because no country can insulate itself from it - Britain too," Brown told parliament.

His comments echoed Bank of England governor Mervyn King who warned a day earlier that Britain was "likely" entering a recession - which is usually defined as two successive quarters of negative economic growth.

New Zealand shares lost 3.18 percent as a record one percentage point reduction in interest rates by the central bank failed to cheer investors.

Indian shares slid 4.8 percent in morning trade, slipping back below the key 10,000 points level.

In Japan, data showed the country's trade surplus plunged 94 percent in September from a year earlier, adding to fears that its export-led recovery from recession in the 1990s has ground to a halt.

The euro fell to multi-year lows as traders braced for interest rate cuts by the European Central Bank to try to spur economic growth.

The euro dropped briefly to 1.2726 dollars, the lowest since November 2006.

It slid to 123.60 yen, levels last seen in December 2002.

The dollar slipped to 97.44 yen, down from 97.79 in New York late Wednesday, as investors continued to unwind risky bets.