( CNN ) -- Asian stock markets tumbled in early trade on Thursday , reacting sharply to global fears that Italy 's debt crisis could trigger a European recession . The slump tracked Wall Street where the Dow Jones industrial average fell almost 400 points in one of the steepest declines in more than a month . The Dow finished down 389.24 points , at 11,780.94 , its worst decline since Sept. 22 . Leading indices in Asia declined at the open . Japan 's Nikkei 225 index fell 2.1 % to 8,569 while Hong Kong 's Hang Seng index plummeted 4.1 percent to 19,189 . South Korea 's Kospi dropped 2.6 % to 1,858 and Australia 's S & P ASX 200 lost 2.7 % to 4,230 . Italy , Europe 's fourth largest economy , headed deeper into crisis on Wednesday after its borrowing costs exceeded 7 % -- a psychologically important threshold since Greece , Portugal and Ireland required bailouts when their 10-year bond yield broke through this level . Selling intensified in Europe too after European Union officials said there were no plans to rescue Italy because its debt -- at $ 2.6 trillion -- was too large for eurozone countries to absorb . The selling intensified in the afternoon amid reports that European Union officials said they have no plans to rescue Italy . While Italy 's bond rates are triggering intense market anxiety , experts say the problem is a lack of investor confidence , rather than solvency , which is plaguing debt-laden eurozone neighbors like Greece . `` This is a crisis of confidence , not of fundamentals , '' said Mark McCormick , currency strategist at Brown Brothers Harriman . `` Italy 's debt level is sustainable , but it needs to implement policies that will support economic growth . '' If Italy works to solve its problems , the European Central Bank or International Monetary Fund will likely have the leverage that they need to step in with an emergency policy response to help reduce nervousness , said McCormick . `` We 're already hearing rumors of an emergency ECB meeting , so they could come in and aggressively buy more Italian bonds , '' said McCormick . `` But it 's a moral hazard for the ECB to buy a country 's debt unless that country is addressing its long-term problems . '' A set of economic reforms is making its way through the Italian parliament , and Prime Minister Silvio Berlusconi has agreed to resign after the budget reforms are approved . But that may not happen until December . CNNMoney 's Hibah Yousuf contributed to this report .
Asian stocks track Wall Street sell-off over European debt woes . Nikkei 225 index falls 2.1 % , Hang Seng plummets 4.1 percent , Kospi dropps 2.6 % . Currency strategist : This is a crisis of confidence , not of fundamentals .