ZHANG:
It was a dramatic sell off in Asia stock markets on Tuesday. Some investors called it panic selling as fears over the chance of a U.S. recession continued to spark concern.

Japan's Nikkei fell more than 5.5 percent in late afternoon trade. The index hit a 28-month month low and the second straight day of heavy losses.

The worry is that a U.S. recession this year will cause a dramatic slowdown in growth across the globe. The Bank of Japan met on Tuesday, leaving interest rates unchanged, but analysts are betting the bank will cut rates by the end of the year.

Exporters in Japan, including big names such as Sony, have already suffered from a rising yen and falling dollar. The shares fell sharply on Tuesday.

The dollar hit a two and a half year low against the Japanese currency.

In Hong Kong, a similar story with the benchmark Hang Seng Index sliding 8 percent by its midday recess.

China shares bore the major brunt of selling with investors bailing out of stocks like PetroChina. The nation's largest oil producer fell 12 percent.

Francis Lun is general manager at Fulbright Securities in Hong Kong.

[Francis Lun, General Manager, Fulbright Securities]:
"Basically, it's the financial markets losing confidence in the U.S. economy. Believing the U.S. economy will fall into a recession and the subprime crisis will hit all the financial institutions and that creates the panic selling."

Market losses were across the board, as Taiwan lost 6.5 percent, and South Korea lost more than 4 percent. Australia stocks suffered their 12th consecutive day of stock market losses. This is the worst run the benchmark Australia index has had in a quarter of a century.

Meanwhile, in a surprise move, the U.S. Federal Reserve cut interest rates by 75 basis points on Tuesday, the largest single rate cut since 1984.

The cut is being interpreted by analysts as a recession-fighting move, as global markets fell for the second straight day. The rate cut was announced after the Asian markets closed on Tuesday, so we’ll be keeping an eye on how they react on Wednesday.

So stay tuned. It’s going to be a bumpy few days.