REGIONAL stock markets reeled from renewed selling pressure on Wednesday, as financial institutions came under attack, after embattled Swiss bank UBS reported a staggering 12.5 billion Swiss franc loss for its fourth quarter, and more mortgages turned sour in the United States.

UBS' loss left a sour taste among traders who had snapped shares in the morning in anticipation of a cut in interest rate by the US Federal Reserve on Thursday morning (3.15 am Singapore time), helping the benchmark Straits Times Index to gain 14 points initially.

Singapore shares ended 1.64 per cent lower on Wednesday with The Straits Times Index falling 49.87 points to 3,000.03.

Elsewhere, Hong Kong's Hang Seng Index tanked 2.6 per cent, while South Korea's Kospi Index was down about 3 per cent.

Big losers here included DBS Group Holdings which fell 36 cents to $17.70 and United Overseas Bank which lost 28 cents to $17.28.

Property stocks were also on the down swing, hurt by a Citigroup report that demand for prime office space may not be strong as earlier expected. City Developments fell 48 cents to $11.46, while CapitaLand lost 18 cents to $5.97.

Even shipping and shipyard counters are under attack. Cosco Corp sank 23 cents to $4.46, while Yangzijiang tumbled nine cents to $2.41. Both counters were spooked by the plunge in the Baltic Dry Index which has, so far, fallen 49 per cent from its November highs.

'The problem is a lack of buyers to lend support to blue-chips as they tumble. No one wants to be a hero and buy ahead of next week's Chinese New Year holiday,' said a dealer.

So far, only 1.18 billion shares worth $1.39 billion changed hands - roughly half the average daily volume encountered last week.