Markets in Asia and Europe Drop Sharply in Panick Reaction to New York Stock Exchange Plunge; Hong Kong Market Loses 13.7 Percent and London Prices Fall 8.5 Percent in Worst Point-Loss EverBy DIRK BEVERIDGE

LONDON (AP) _ Spooked by the plunge on the New York Stock Exchange, Hong Kong's market melted down today, shedding 13.7 percent in its largest selloff since 1989. Prices in London, Europe's top market, fell in their worst point-loss ever.

After two hours of trading, the Financial Times-Stock Exchange 100-share index was off 332.7 points, or 6.9 percent, at 4,508.0. Earlier, London's ``footsie'' was off 9.5 percent at 4,382.8.

That compares with the previous record fall of 250 points on Black Monday, Oct. 19, 1987, a drop then that wiped out 12.5 percent of the index's value.

Traders were just trying to ride out the turbulence.

``We're down 400 points,'' said James Dewhurst, an equity salesman at Charterhouse Tilney Securities in London. ``You're just going to see us following all the other markets. I don't think I've got any bright ideas beyond that.''

Markets across Asia and Europe dropped sharply as investors reacted to the worst single-day point drop in the history of the Dow Jones Industrial Index, a 554-point, 7.2-percent fall Monday.

Steep overnight drops in Asia spread to Europe's big markets.

In Frankfurt, the DAX index plunged almost 10 percent in early trading. In Paris, the CAC 40 index opened 9.1 percent lower and was off 7.6 percent in later trading.

In Moscow, trading on Russia's market was suspended before the opening today after a big selloff appeared all but certain.

The Russian market, which has been the best performing stock market in the world over the past two years, fell 6 percent on Monday.

The Tel Aviv Stock Exchange briefly suspended trading after share prices plummeted 6.6 percent in the first minutes of trading.

Analysts said the chain-reaction global selloffs, which began in Thailand and smaller Asian markets before striking Hong Kong, were likely to continue because of investor panic and because the New York market had been considered overvalued.

``We may be still seeing some dramatic falls in the United States to come,'' said Gilbert K. Chu, executive director of Sun Hung Kai Securities Ltd. in Hong Kong. ``And so the whole thing goes around and around again.''

The big question when Asian stock markets opened today was how low they would go. Hong Kong brokers were anticipating a fall of 1,000 points from the Monday close of 10,498.20 _ which itself was down 5.8 percent from Friday.

But what they got was a tumble of 1,203 points or 11.45 percent in the first two minutes. By midday it had lost 1,621.8 points, a 15.44-percent decline _ and at one point surpassed 16.4 percent.

The Hang Seng blue-chip index closed 1,438.31 points lower at 9,059.89, off 13.7 percent.

The fall exceeded Thursday's 10-percent crash and was the worst since 1989, when the market lost 22 percent in reaction to the Chinese army suppression of pro-democracy protests in Beijing's Tiananmen Square.

In Tokyo, the Nikkei Stock Average lost 4.26 percent to close at 16,312.69 _ its lowest level since July 1995.

Hong Kong's street economy has yet to feel the impact of seven days in a row of market price falls, but slower growth, fewer home purchases, slower luxury sales, less dining out is inevitable.

``We will see it in the next six months to 12 months,'' said Sun Hung Kai's Chu. ``It makes the picture a lot less rosy compared to, say, three months ago.''

Hong Kong Chief Executive Tung Chee-hwa said today's fall was a reaction to New York's drop rather than a referendum on Hong Kong's own economy.

``The markets will go up and down,'' he told reporters. ``The latest round is because of what happened overseas. But our fundamentals are strong, that is the most important thing.''

No one has found any link between the market drop and Hong Kong's July 1 handover from British to Chinese rule. Investors and analysts alike said the plunge would have happened no matter what flag was flying.

In keeping with their pledges of autonomy for Hong Kong, Chinese financial officials have taken a hands-off stance while expressing their confidence in the territory's economic soundness.

In the generally accepted scenario, the market dominos started falling in southeast Asia over the summer when investors dumped regional currencies and stocks, nervous over rising debt and falling exports. The contagion spread to Hong Kong last week, when speculators judged the Hong Kong dollar overvalued.

Government moves to defend the currency were successful but pushed up interest rates, hurting corporate earning prospects and sending the market plummeting 10 percent in one day. By the close of trading Monday, the market was down nearly 23 percent from the previous Monday.

In other markets:

_The Taiwan index closed down 5.9 percent to 7,210.01 points, its lowest level since January.

_In South Korea, the Korea index closed down 6.6 percent to 495.28, its lowest level since 1992.

_In Singapore, the Straits Times Industrials Index was at a five-year low at 1,492.77, down 7.85 percent.

_In Kuala Lumpur, the 100 blue-chip stocks index was down 6.1 percent.

_In Australia, the All Ordinaries Index closed down 7.18 percent.

_In New Zealand, the capital index crashed 12.45 percent today after a three-day Labor weekend holiday.

_Latin American markets plunged Monday, with Brazil's markets off 14 percent, Buenos Aires down 13.7 percent and Mexico 13.3 percent lower.