By Jeremiah Marquez
The Associated Press

HONG KONG?Most Asian stock markets extended their slump Tuesday after unremitting troubles at financial giants like American International Group and HSBC sent Wall Street tumbling to new multiyear lows overnight.

Japanese shares continued to languish, hitting near 26-year lows. Declines across the region added to the global sell-off that started last week as the world economic slump showed no signs of abating and financial firms, despite billions in government aid, continued reeling from losses.

The pain spread Monday after AIG announced a $62-billion loss for the fourth quarter?the biggest in US corporate history?and accepted another $30 billion in bailout money from the government.

In Europe, HSBC Holdings PLC said it needed to raise nearly $18 billion in new capital through a share issue and reported a 70-percent drop in earnings for last year. Shares in the heavyweight lender, Europe?s largest by market value, plunged more than 18 percent in Hong Kong trade.

With no end to the economic crisis in sight, markets in the US and Europe plummeted overnight, and the Dow Jones benchmark finished below 7,000 for the first time since May 1, 1997.

?There?s just a lot of fear driving the markets right now,? said Lucinda Chan, a director at Macquarie Private Wealth in Sydney.

?The market is consumed by the global sell-down at the moment, and I think there?s going to be more pain before there?s a turnaround.?

Markets clawed back some of their losses, though most bourses headed lower.

Tokyo?s benchmark Nikkei 225 stock average lost 50.43 points, or 0.7 percent, to 7,229.72, after a 3.8-percent drop Monday. Earlier in the day, the key index dipped below its lowest close in 26 years, set Oct. 27. It remained just above a 26-year intraday low of 6,994.90 reached Oct. 28. Japan?s broader Topix index closed at its lowest since December 1983.

In Hong Kong, the Hang Seng lost 283.58 points, or 2.3 percent, to 12,033.88.

Shanghai?s key index was off 1.1 percent, with markets in Australia, Singapore, and Malaysia also losing ground.

Elsewhere, South Korea?s Kospi gained 0.7 percent to 1,025.57 as the country?s currency, the won, rebounded modestly after plunging to fresh 11-year lows on Monday.

The bearish sentiment carried over from New York, where news about AIG and HSBC underpinned a growing perception that problems in the financial industry will mean a longer, deeper recession than originally thought.

And investors found few reasons to overcome their fears as economic readings overnight painted a mixed picture.

In the US, personal spending and incomes were up in January but construction was down. Meanwhile, manufacturing, which has weakened dramatically amid slowing demand, improved slightly last month but was still contracting, analysts said.

In the US, the Dow tumbled 299.64, or 4.2 percent, to 6,763.29. It last closed below 7,000 on May 1, 1997.

Broader benchmarks also ended down, with the Standard & Poor?s 500 stock index losing 34.27 points, or 4.7 percent, to 700.82. During the session, the measure dipped below the psychologically important 700 level. It hadn?t traded below 700 since October 1996.