Lehman Brothers’ bankruptcy sends shares plunging in Japan and Hong Kong but Europe and US stocks hit less than expected

Asian markets have dropped sharply following the collapse of US investment bank Lehman Brothers.

In Japan, South Korea and Hong Kong shares fell by more than 5% today, in their first day of trading since the 158-year-old institution filed for bankruptcy.

Traders in Taipei and Singapore also saw markets plummet and Australia and New Zealand were hit too, although the damage there was less severe.

The Bank of Japan injected 2.5 trillion yuan (£13bn) into the banking system in an attempt to calm the markets, with other central banks in the region following suit.

The news follows steep falls on European and US stock markets yesterday, although the markets there were not as badly hit as some had predicted.

Meanwhile, Barclays Bank confirmed this morning that it is in talks over the "possible acquisition of certain Lehman Brothers’ assets”.