Asian stock markets tumbled on Monday with financial shares such as Macquarie Bank hit by global credit jitters, while fresh concerns about the health of the U.S. economy knocked the dollar lower.

Oil prices slid briefly below $74.50 a barrel amid heightened concerns for economic growth, but flight to safety helped gold stay near one-week highs and kept the benchmark U.S. 10-year Treasury yield pinned near 2-½ month lows.

Data last Friday showing U.S. employers added jobs at the slowest rate in five months and weaker growth in the U.S. service sector all added to concerns about the world's biggest economy, Asia's top export destination.

Bear Stearns further weighed on market sentiment after saying credit markets were in their worst shape in two decades and after ratings agency Standard & Poor's warned mortgage credit problems could hurt the investment bank's profits.

While not directly affected by U.S. mortgage bond market woes, Asian equities will need to reflect the changing appetite for risk as well as slower Asian exports to the U.S., said Nomura analyst Sean Darby.

By the end of morning trade, Tokyo's Nikkei average had shed 0.9 percent, while other major markets across the region fell between 1 percent and 4 percent.

Investors sold financial issues including Mitsubishi UFJ , Australia's Macquarie Bank and HSBC Holdings as well as exporters such as Canon Inc., Sony, Hyundai Motor and Samsung Electronics

The market hates uncertainty and it is uncertain who, how, why and what (the credit squeeze) is going to affect and whether it is going to have a major effect on further confidence in the U.S. economy, said Tony Russell, a senior equities adviser at ABN AMRO Morgans in Australia.

Samsung Electronics shed 1.5 percent, outperforming a 2 percent fall in the benchmark KOSPI, after it kept its monthly chip production targets unchanged despite a power outage on Friday that hit six semiconductor production lines.

Investors bought Toyota Motor, sending its shares up 1.7 percent after the world's top automaker reported a better-than-expected 32 percent rise in quarterly operating profit on Friday .

The MSCI index of Asian stocks outside Japan shed 2.2 percent by 0300 GMT after earlier plumbing a fresh one-month low. At the session trough, it was down 9.6 percent from the record high set on July 24, matching the percentage fall suffered in late February and early March.

The index fell 1.0 percent last week, marking its second weekly decline.

Among the region's top decliners, Singapore's Straits Times Index dropped 3.8 percent to 3-½ month lows while Hong Kong's Hang Seng Index slid 2.4 percent to one-month lows.

DOLLAR PRESSURED

Investors sold the dollar amid worries about the U.S. economy while credit crunch fears prompted an unwinding of risky carry trades. A carry trade involves selling the low-yielding currency, often the yen, to buy higher-yielding assets.

It doesn't seem to be a case where conditions in the credit markets are going to improve very quickly, said a trader at a major Japanese trading house.

The dollar fell as low as 117.19 yen on electronic platform EBS, its lowest since late March, before regaining some ground to be at 117.63 yen.

The euro touched a high of $1.3840 on EBS, nearing a record high of $1.3853 set in late July, before paring gains to be at

$1.3807.

Weakness in the Nikkei as well as strength in U.S. Treasuries helped prop up Japanese government bond prices, pushing yields sharply lower.

The benchmark 10-year yield dropped 5 basis points to 1.730 percent, its lowest level since late May.

London Brent which closed $1.01 lower on Friday, was down 20 cents at $74.55 after reaching a low of $74.26, while spot gold traded at $672.20, slightly off the one-week peak of $674.20 touched last Friday.

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