A pedestrian walks past an electric market board in Tokyo on Friday. Japanese shares fell Friday morning after Wall Street's steep fall on Thursday. (Katsumi Kasahara/Associated Press)

Virtually all Asian markets were in the red on Friday amid doubts that a $700-billion US financial bailout package would prevent a recession.

Japan's benchmark Nikkei 225 stock average skidded 216.62 points, or 1.94 per cent, to 10,938.14, the lowest it has been since May 2005.

In Hong Kong, the Hang Seng index also fell 2.3 per cent to 17,804.

Markets in Australia, Singapore, India, Malaysia and Thailand were also down on Friday.

The fall on the Asian markets comes in the wake of a plunge on Wall Street on Thursday, where the Dow Jones industrial average fell 348.22, or 3.22 per cent, to 10,482.85.

In Toronto, the S&P/TSX composite index dropped below 11,000 to close at 10,900.54. The 813.97 point loss put it at its lowest level in more than two years.

Asian investors seemed unenthused about the possible passage of the financial bailout package by the House Representatives on Friday, reported the Associated Press.

If passed, the revised bill, which was approved by the Senate on Wednesday night, would let the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions, which advocates say would allow frozen credit to begin flowing again and prevent a serious recession.

Even if the proposed legislation passes, Asia is pessimistic about the outlook for the U.S. economy, which is a vital export market for the region, said Tim Rocks, an Asia strategist at Macquarie Securities in Hong Kong.

"The bailout could move us toward a solution, but there are many unresolved issues," Rocks said. "We're starting to see the first evidence that the U.S. economy is starting to suffer, and this will have an impact on Asia exports through next year."

Resolving the bad bank debts at the centre of the global credit crisis will take a long time, he said.

Japanese automakers sank for a second day Friday after the industry reported September sales plunged in the United States, causing shares of Toyota Motor Corp. to fall 5.3 per cent, Nissan Motor Co. seven per cent and Honda Motor Co. 5.5 per cent.

"It is clear the U.S. auto market, for one, is expected to stay sluggish," said Noritsugu Hirakawa, a strategist at Okasan Securities Co. in Tokyo.

Other decliners included Nintendo, which sank seven per cent.

All of Asia's big export sectors — including technology, shipping and steel industries — are at risk, Rocks said.

"This is not a good scenario any way you look at it for Asia for next year."

With files from the Associated Press