Stock markets tumbled across Asia on Wednesday and the dollar fell to a 2½-year low against the yen amid heightened fears that the US is falling into a recession.

The onslaught of bad news out of one of Asia’s most important trading partners hit markets hard. Bank shares suffered after Citigroup and Merrill Lynch said they need $21.1bn of fresh capital, while technology stocks slid on Intel’s cautious outlook for 2008.