HONG KONG -- Asian stocks tumbled 3.0-4.0 percent on Thursday, with emergency actions by central banks and governments around the world failing to ease a financial crisis that has sent investors fleeing to gold and government bonds.

The seismic shift on Wall Street continued apace, with frenetic consolidation in the financial sector in the world's largest economy, sending the MSCI all-country world stocks index to its lowest since November 2005.

Investors piled into short-term US Treasuries, pushing yields down close to zero as investors bailed from money market funds. Even the Federal Reserve had to receive a $40 billion injection from the US Treasury to help it manage its balance sheet, after the Fed offered $85 billion in loans to rescue American International Group on Wednesday.

Overnight, No. 2 US investment bank Morgan Stanley and top US savings and loan Washington Mutual were reportedly up for sale, and a source familiar with the matter said Britain's Lloyds TSB agreed to buy rival HBOS, reflecting the unstable landscape that has contributed to gold's 18 percent surge in the last week. "Credit fears have now reached a climax. It's presumptuous to assume it would end in one day," said Harushige Kobayashi, head of research department at broker Securities Japan.

"The market ignores fundamentals and is now 95 percent driven by psychological factors."

The Chicago Board Options Exchange Volatility Index or VIX, Wall Street's main barometer of investor fear, closed on Wednesday at its highest level in almost six years.

Japan's Nikkei share average fell 3.0 percent to a three-year low early on Thursday, with shares in high-profile exporters such as Sony and Honda Motor Co. the biggest drags.

The MSCI Asia-Pacific ex-Japan stocks index fell 1.7 percent to its lowest since July 2006. The index is down 37.6 percent so far this year.

Gold prices in the spot market rose 2.5 percent to a one-month high as frenzied investors sought relatively safe assets.

Gold posted its biggest nominal rise ever in dollars on Wednesday.

"This is stunning and testimony to these historic times," said Alan Ruskin, chief international strategist with RBS Greenwich Capital, in a note. "It is clear that fear and a desperate search for a hedge against risk has trumped all."

Fear of the unknown has also pushed investors to government bonds, chasing safety above all else, even yield. US Treasury bill yields inched toward zero.

One-month Treasury yields dipped to 0.015 percent, from 0.040 percent late in New York on Wednesday, when it may have actually traded at negative levels, according to dealers.

However, investors are quickly learning that in the current crisis almost nothing is safe, even US money market funds.

Late Wednesday, Moody's Investors Service sharply downgraded the Reserve Primary Fund after it fell below $1 a share in net asset value due to losses on debt issued by Lehman Brothers, which has filed for bankruptcy protection.

Crude oil held steady at a little above $97 a barrel after jumping $6 on Wednesday.

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