SINGAPORE (Bloomberg) -- Asian stocks fell, extending a rout that wiped $2.66 trillion from global equities, on concern losses in the U.S. sub-prime mortgage market will slow economic growth and drive up financing costs.

Macquarie Bank Ltd. and DBS Group Holdings Ltd. led declines by brokerages and banks. Sony Corp. fell after the yen rose to a four-month high as investors pared bets on assets funded with the currency. Treasuries climbed as investors sought the safety of government bonds over equities and corporate debt.
“Market concern has spread to the broader U.S. economy from the sub-prime issue and investors are reevaluating their bullish view of exporter stocks,” said Hiroshi Chano, who helps manage $7.3b at Yasuda Asset Management Co. in Tokyo.
The Morgan Stanley Capital International Asia Pacific Index lost 1 percent to 151.32 at 6:21 p.m. in Tokyo. The benchmark has dropped 6.2 percent since closing at a record on July 24. The drop has wiped out more than the combined market value of South Korea and Australia since this year's peak on July 23.
Delinquencies on loans made to people with poor credit and a resultant sell-off in high-yield debt have caused losses among money managers worldwide. Shares in developing nations such as Indonesia posted the region's biggest declines Monday.
The Nikkei 225 Stock Average lost 0.4 percent to 16,914.46 in Japan while Singapore's Straits Times Index slid 3.7 percent. Benchmarks in Hong Kong, Indonesia, Malaysia, the Philippines, and Thailand dropped by more than 2 percent. Indexes slid elsewhere in the region, except in China, where the CSI 300 rose 2.3 percent to a record.
BHP Billiton Ltd., the world's biggest mining company, retreated along with metals and oil prices.
---------- Financials decline
DBS, Singapore's biggest bank, dropped 4.6 percent to S$20.90, its biggest loss since Feb. 28. The lender said 22 percent of its $850 million in collateralized debt and loan obligations are based on asset-backed securities.
Mizuho Financial Group Inc., Japan's No. 3 lender, slipped 2.5 percent to 702,000 yen, bringing its losses over the past 8 sessions to 18 percent. HSBC Holdings Plc fell 1.5 percent to HK$142. Its North America earnings in the first half slumped 35 percent because of loan defaults by sub-prime borrowers.
“There is a climate of fear,” said Marc Desmidt, Tokyo-based chief investment officer at BlackRock Japan Co., whose parent company has $1.1 trillion in assets. “It will take time for people to be used to the new risk in the market.”
The perceived risk of owning Asian bonds outside Japan has reached the highest in more than three years. Contracts based on $10m of debt in the iTraxx Asia Ex-Japan Series 7 Index of 50 borrowers increased on July 30 to $104,000 from $38,750 at the start of June, according to CMA Datavision in London.
------------ Pulling out
A measure of the MSCI Asian index's 10-day historical volatility rose last week to the highest since March. About 7.4 billion shares changed hands so far Monday, compared with the full-day total of 9.5 billion traded on Aug. 3.
“The sub-prime thing is reducing leverage as people pull their money out of all markets and asset classes,” said Michael Birch, who helps manage the equivalent of $133m at Wallace Funds Management in Sydney.
Companies that rely on U.S. sales fell. Taiwan Semiconductor Manufacturing Co., the world's largest customized chipmaker, lost 2 percent to NT$62.60. Chartered Semiconductor Manufacturing Ltd., Singapore's biggest chipmaker, slid 1.8 percent to S$1.12.
Bear Stearns, whose hedge funds collapsed because of rising defaults in home loans, tumbled the most since September 2001 last week after S&P cut the brokerage's credit-rating to negative.
------------ Stronger yen
“Investors must keep an eye on the mortgage problems, because that can derail U.S. consumer demand for Asian exports,” said Vickie Hsieh, who helps oversees $1.4b at President Investment Trust Corp. in Taipei. “Electronics exporters will suffer because they depend on U.S. customers.”
Sony, the world's biggest video-game maker, lost 3.1 percent to 5,920 yen. Canon Inc., the world's largest digital camera maker, dropped 2.3 percent to 6,370 yen. The U.S. is the biggest overseas market for Sony, and North America accounted for 31 percent of Canon's total revenue.
The yen recently traded at 117.64 against the dollar, rising from 119.10 at 3 p.m. in Tokyo on Aug. 3. A stronger yen reduces the value of Japanese exporters' sales in the U.S.
------------ Emerging markets drop
Employers in the U.S. added a fewer-than-forecast 92,000 workers to payrolls last month. Economists projected payrolls would rise by 127,000, according to a Bloomberg News survey. The Institute for Supply Management's index of non-manufacturing businesses, including banks, builders, and retailers, fell to 55.8 in July from 60.7 in June, the biggest drop in almost two years.
The MSCI Emerging Markets Index dropped 1.8 percent Monday, on speculation overseas fund managers are selling investments in riskier markets.
Overseas investors sold $8.7 million more of stocks in the Philippines than they purchased Monday. Foreign fund managers sold a net $549.2 million of shares in Taiwan Monday.
“There are basically concerns about the flows of funds going back to the U.S.,” said Kelvin Miranda, who manages $210m at Asian Asset Management Sdn. in Kuala Lumpur. About 40 percent of his holdings are in cash, the highest since the 1997 Asian financial crisis, he said