Hong Kong's benchmark Index further sank to a 23-month new low off the key support level of 18,000 Wednesday, failing to stage a rebound after the index plunged over 1,000 points Tuesday amid worries of a global financial turmoil after investment bank Lehman Brothers filed for bankruptcy protection.
The Hang Seng Index fell 663.42 points, or 3.63 percent, to 17,637.19, the index's day low and lowest close since Oct. 4, 2006,when it ended at 17,629 points.
Hong Kong stocks rose 2.13 percent to open Wednesday's morning session at 18,691.30, and once went up to the day high of 18699.18in early minutes, following the U.S. Federal Reserve announced an unprecedented deal to rescue insurance giant American International Group overnight.
But news of the U.S. government's rescue move failed to calm investors, who were waiting for more bad news from major financial institutions, analysts said.
The benchmark Hang Seng Index quickly reversed the early gains, fell off the key support line of 18,000 before midday.
Turnover fell to 76.23 billion HK dollars from Tuesday's 88.42 billion HK dollars .
Chinese banks led the day's blue-chip losses on concerns the People's Bank of China's latest rate cut will narrow interest margins of the major lenders.
ICBC, China's largest lender, lost 9.9 percent to 4.01 HK dollars.
China Construction Bank, the third largest bank in China, fell 8.2 percent to 4.73 HK dollars.
Bank of Communications dropped 7.7 percent to 6.58 HK dollars, and Bank of China declined 4.6 percent to 2.90 HK dollars.
China Merchants Bank said Wednesday it holds 70 million U.S. dollars worth of bonds issued by the collapsed investment bank. The Hong Kong-listed shares of China Merchants ended down 7.7 percent at 18.14 HK dollars.
All but six blue-chip stocks ended in the red Wednesday. Blue-chip heavyweight HSBC, which accounts for the largest weighting of the Hang Seng Index, went down 2.5 percent at 115.10 HK dollars.
Heavyweight China Mobile, the largest mobile phone operator in the country and the market's largest stock measured by capitalization, falling 2.0 percent to 70.20 HK dollars.
Analysts said they don't expect any major near-term rebound in the blue-chip index. But attractive valuations and solid fundamentals of Hong Kong companies could help the index stay around current levels instead of falling further.