Asian stock exchanges were feeling the effects on Tuesday of Monday's steep drop in global stocks.

Japan's benchmark Nikkei 225 index was down 5.3 per cent in mid-afternoon trading Monday while Hong Kong's blue-chip Hang Seng Index shed 5.7 per cent.

Both markets had been closed for holidays when investors learned Lehman Brothers had filed for bankruptcy and Merrill Lynch would be sold to Bank of America. 

Across Asia, markets were all deep in the red.

Tuesday's early bloodletting follows a bleak Monday for world stock markets, which were hard hit after the double-fisted blow from Wall Street. 

Toronto's TSX Composite Index lost 515 points, or more than four per cent, to close at 12,254 points. 

The Dow Jones industrial average suffered similar losses, falling more than 500 points and registering its largest point drop since the Sept. 11, 2001, attacks.