SINGAPORE -- Asian currencies fell sharply for a second day on Tuesday, undermined by heightened fears of a US recession and tumbling equity markets, with the South Korean won, Philippine peso and Indonesian rupiah leading the drop.

Stock markets in Asia mirrored the decline in the US equity futures markets and extended losses sustained in the previous session, with the MSCI's measure of stocks in Asia excluding Japan dropping a further 2.4 percent, on top of Monday's 6.0 percent decline.

The flight from risky, higher-yielding assets pushed the Japanese yen higher, to a 2-1/2-year peak against the dollar, as market participants braced for the possibility the US economy is close to a recession and showed their disappointment at US President George W. Bush's fiscal plans to shore up the economy.

The won hit a 14-1/2-month low at 955.6 per dollar after stocks in the country fell as investors fled to safe-haven assets.

"Korea's stock market (KOSPI) dropped 4.0 percent today, which mainly is selling from foreign investors and causing dollar buying," said Nam Kyu Kim, a trader at ING Singapore.

He added that the yen's rise, causing the dollar/yen pair to drop to levels around 106, had triggered the risk averse trading in the market.

The Philippine peso plunged to a 3-week low to hit 41.58 per dollar, succumbing to the broad risk aversion.

"(The fall is) not really due to stocks but mainly global risk aversion on emerging assets," a trader in Manila said.

The Indonesian rupiah Asia's high-yielder, also shed half a percent, while other Asian currencies had smaller losses.

Analysts said some currencies such as the won, which has seen heavy selling of its equity markets by foreigners, were more vulnerable and the weakness in the won could persist longer than in currencies backed by stronger fundamentals such as the peso.

"We remain biased to sell the won against the dollar over the medium term, while we view the latest peso sell-off as temporary and providing better entry levels for long peso positions to benefit from structural remittance inflows, privatization attracting foreign inflows and an improving fiscal credibility," JPMorgan analysts said in a note to clients.