HONG KONG (AP) _ ``Panic and fear,'' securities trader Kent Rossiter muttered distractedly as he watched Hong Kong's stock index tumble.

The slide Thursday was Hong Kong's worst since the 1980s. The Hang Seng blue chip lost 10 percent of its value for the day, 23 percent for the week. And it was not clear whether the sell-off was over.

But other markets around the world weren't waiting to find out.

At London's stock exchange, the biggest in Europe, a key blue-chip index fell 3 percent. There were even bigger drops in Frankfurt and Paris.

In the United States, the Dow Jones industrial average tumbled almost 230 points at one point, or by 2.9 percent. By late afternoon, Wall Street's best-known indicator had recovered some lost ground but still was off 157.90, or 2 percent, at 7,876.75.

Rossiter, senior institutional sales manager at Nikko Securities Co. (Asia) Ltd., was hopeful the slide in Hong Kong wouldn't continue for long.

``The weekend is going to give (investors) time to think and realize, `We panicked, we oversold,' '' he said. ``After a few days, if we can hold out, we'll be fine.''

By the end of Thursday's trading, most analysts agreed the market had been oversold and Financial Secretary Donald Tsang was telling reporters, ``I don't think it is a matter for people to panic about.''

But the only bigger plunges to ever hit the Hong Kong market were the 22 percent drop that followed China's 1989 crackdown on demonstrators in Beijing, and the 33.3 percent dive in the global market crash of 1987.

Economists blamed Thursday's stampede in Hong Kong on the regional contagion of currency speculation and shaken investor confidence. Markets in Thailand, Malaysia, Indonesia and the Philippines have been reeling since investors began dumping their currencies and stocks in July

The Hong Kong fall further rattled those economies and gave Japan an unfamiliar jolt: Tokyo's Nikkei Stock Average slipped 3.03 percent.

Analysts agreed that Hong Kong is not about to experience a meltdown of the kind that has hit Southeast Asia. Unlike those economies, Hong Kong has regular government budget surpluses, low foreign debt, and a sound banking system.

They also said the market fall was not an investor referendum on Hong Kong's political stability or Chinese rule, which has been remarkably hands-off.

Rather, analysts said the plunge was triggered by interest rate hikes that resulted from fending off speculative attacks on the Hong Kong dollar.

Speculators were betting the government _ under pressure from Hong Kong manufacturers to stay competitive _ would have to follow the regional example and devalue the currency, which in turn would reduce the worth of stock portfolios.

Instead, the government dug in and sold U.S. dollars to support the Hong Kong currency's peg to the dollar. By the end of the day, the Hong Kong dollar had strengthened to 7.7075.

Another factor in the plunge was the decision by several trend-setting investment fund managers to cut or eliminate their holdings in Asia because of lowered growth expectations.

``I don't think the people who run the major funds distinguish between countries,'' said Ian Perkin, chief economist at the Hong Kong General Chamber of Commerce. ``We're paying for that.''

The crash came as Hong Kong's new leader, Tung Chee-hwa, was in London trying to publicize the smoothness of the transition from British to Chinese rule on July 1. Repeatedly he pointed out that political unrest and repression predicted before the handover have failed to materialize.

The economy was the last direction from which most people expected trouble.

Only a month ago, Hong Kong's financial soundness was the toast of the world's bankers at an International Monetary Fund conference in the glittering new convention center. Hong Kong's markets were a haven for institutional investors fleeing East Asia's other, ailing economies.

Perkins said Hong Kong's economy has been showing some signs of underlying weakness, including sluggish retail sales and a long, slow decline in exports. Tourism, Hong Kong's second-largest foreign currency earner, is in a severe slump.

Still, Hong Kong is in better shape than other Asian economies, said Anson Chanson, Hong Kong's top civil servant.

``Our economic fundamentals remain very strong and we have absolute determination to defend the Hong Kong dollar,'' she said. But ``Hong Kong cannot escape being affected in the short term by what's happening in the region.''

There were no signs of public panic, such as runs on banks. The mood was gloomy but dogged on trading floors and at Internet companies where small investors clustered around screens to check their portfolios.

``This is too terrifying,'' said Ho Tim-lung, a taxi driver, who estimated his losses at $10,400 to $13,000. ``But I have to hold onto the shares, to wait for them to rise again.''