Asian stock markets have fallen sharply following Wall Street’s plunge to a 12-year low.

Japan’s benchmark Nikkei share average fell 2.6 per cent by midday on Tuesday while Hong Kong’s Hang Seng lost nearly four per cent and South Korea’s Kospi more than three per cent.

Other markets across the region were also lower after US stocks lost more than three per cent to record their lowest close since 1997.

The Dow Jones industrial average tumbled 3.41 per cent on Monday to 7,114.78, its lowest close since May 7, 1997.

The index is 14 per cent down over the past 10 sessions.

The broader Standard & Poor’s 500 index logged its lowest finish since April 11, 1997, losing 3.47 per cent to 743.33.

‘Lousy job’

The downward spiral comes as Barack Obama, the US president, pledged on Monday to halve the country’s $1.3 trillion budget deficit over the next four years.

It also comes despite his administration announcing more funding for ailing US banks on Monday.

Obama signed into law last week a $787bn stimulus bill and also launched a $75bn plan to help the country’s ailing housing market, but critics have complained about the lack of detail of the plans.

Keith Springer, president of Capital Financial Advisory Services, said “the biggest thing I see here is the incredible pessimism”.

“The government is doing a lousy job of alleviating fears.”

Ryan Detrick, a senior technical strategist at Schaeffer’s Investment Research, said “obviously the stock market is voting no” as to whether the government was “doing proper things to get us out of this problem”.