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Asian markets track US losses on Deutsche Bank worries

Asian markets tumbled Friday, tracking a sell-off in New York as worries about the future of German banking giant Deutsche Bank hammered financial stocks.

A report that several hedge funds had withdrawn their investments in the lender over worries about its viability after US authorities slapped it with a $14 billion penalty over its sale of mortgage-backed securities prior to the 2008 financial crisis.

Pedestrians are reflected in the window displaying stock prices in Tokyo on September 29, 2016. (AFP PHOTO / KAZUHIRO NOGI) / 2016.mb.com.ph

Pedestrians are reflected in the window displaying stock prices in Tokyo on September 29, 2016. (AFP PHOTO / KAZUHIRO NOGI) / 2016.mb.com.ph

There are fears the fine could batter the already fragile firm, fueling talk that it would become another Lehman Brothers, the Wall Street titan whose downfall precipitated the global downturn six years ago.

Deutsche Bank plunged almost seven percent in New York and the losses were reflected in Asia, with Japan’s Mitsubishi UFJ Financial Group diving more than two percent and HSBC down almost one percent in Hong Kong. Sydney-listed Commonwealth Bank sank one percent, as did Westpac.

“Deutsche certainly weighs on sentiment, and the declines are concerning,” James Woods, a strategist at Rivkin Securities in Sydney, told Bloomberg News.

“Being named the number one bank for global systemic risk, it’s entwined with everyone.”

The sell-off dragged broader markets down, a day after an oil-fuelled rally following OPEC’s surprise announcement that it would cut production.

Tokyo ended the morning down 1.6 percent, while Hong Kong was 1.2 percent off, Sydney fell 0.8 percent and Seoul lost 0.8 percent. Singapore tumbled more than one percent and there where sharp losses in Wellington, Taipei and Manila.

However, Shanghai rose 0.2 percent ahead of a week-long national holiday.

The losses followed falls on Wall Street, where traders ran for cover as they brushed off data showing US second-quarter economic growth figures beat forecasts.

The unease spread into currency markets, with high-yielding — riskier — units fell against the dollar as dealers looked for safety.

South Korea’s won fell 0.5 percent, the Indonesian rupiah lost 0.2 percent and the Australian dollar slipped 0.4 percent.

The greenback, however, sank to 100.95 yen from 101.04 yen in New York and well off the levels above 101.50 yen seen earlier Thursday in Asia.

On oil markets both main contracts fell as the euphoria over Wednesday’s shock agreement by OPEC to reduce production faded.

West Texas Intermediate dipped 0.3 percent and Brent was off 0.4 percent.

READ MORE: US stocks tumble on worries about Deutsche Bank