Tokyo (AsiaNews/Agencies) – Asian stock exchanges continue to fall on Monday. Economists remain sceptical about their capacity to stabilise.

Japan's Nikkei index closed 3.4 per cent lower—its biggest one-day fall in nine months—whilst Shanghai's composite index lost 1.65 per cent. In Taiwan shares closed down 3.7 per cent; Seoul lost 2.71 per cent. Singapore and Hong Kong were down 3.82 and 3 per cent respectively. The Kuala Lumpur Composite Index plunged 6.36 per cent. In India Mumbai, which had been spared the major losses of last week, dropped 2.91 per cent today.

A speech to the People’s National Congress by Chinese Premier Wen Jiabao announcing his government’s intention to seek a rate of economic growth of 8 percent this year down from 10.7 per cent in 2006 also had a negative impact.

Experts fear that investors might panic and sell off to reduce potential losses.

Share decline in Asia had repercussions in Europe where exchanges opened with big drops. Similarly, fears that Asian economies might slow down also caused a drop in the price of oil.

The “black period” began on February 27 when Shanghai shares fell 9 per cent, followed soon by other Asian exchanges and then the rest of the world.

Rumours that China might impose a capital gains tax on stock market earning have fuelled the sell-off. Chinese tax authorities denied speculation that it is planning such a tax but many expect China to take steps to reduce money supply for fear of inflation.

Given the sluggish growth of the US economy, there are real fears that it might be moving into recession, especially since its real estate sector might be overheating and cause problems to its mortgage market.

Many analysts had warned that that the world's top indexes and shares were overvalued and a market correction was due. Markets will remain volatile they believe.

So far the global sell-off wiped US$ 1.5 trillion from the value of global shares.