Stock markets across Asia dropped sharply after a decline in retail sales in the United States.  As Daniel Schearf reports from Beijing, Asian businesses are particularly vulnerable to a slow down in U.S. consumer spending.

Tokyo's Nikkei index was down more than 11 percent, its biggest drop in 21 years, while South Korea's main index fell more than nine percent.

The strength of South Korean banks came under scrutiny and its currency, the won, dropped nearly 10 percent against the dollar.

A photographer takes a picture of a display showing stock prices at a brokerage firm in Hong Kong, 16 Oct 2008

Hong Kong shares lost eight percent in early trading but recovered some ground to close down 4.8 percent.

Some markets had more moderate losses; Mumbai's main stock index lost just a little over two percent and Jakarta gave up 3.8 percent.

The declines came after U.S. data showed September retail sales fell 1.2 percent, almost double the expected loss. That sent the Dow Jones Industrial Average in New York sliding almost eight percent.

"This crisis is not over. What has happened in the West is they've taken steps which are starting to lead to a return of confidence in the system," said Bob Broadfoot, managing director of Political and Economic Risk Consultancy in Hong Kong.  "But, the economic fall-out is going to play out over the next year. And, I think that the markets in Asia are starting to realize, especially in places like China, that the economies here are all going to be adversely affected."

Asia's export-oriented economies depend on U.S. consumers to drive growth.  Now that money in the U.S. is tight, Asia is feeling the pinch, because orders for manufactured goods are slowing.

The global financial crisis started with defaults on high-risk loans in the United States.  Big name investment banks were hit hard - Lehman Brothers declared bankruptcy and Merrill Lynch was bought by Bank of America.

As result, credit has nearly dried up around the world, making it hard for companies to borrow cash to fund operations or to expand.

The U.S. government has earmarked more than $700 billion to shore up financial institutions and get credit flowing again. Other governments around the world have announced similar plans.

But the bailout effort has so far shown little sign of restoring investor confidence or calming fears of a global recession.