Hong Kong's shares tumbled 5.4 percent to a near two-year low yesterday after Lehman Brothers sought bankruptcy protection and fears about the US financial system knocked equity markets down across the world.

Financial plays tumbled after Lehman failed to find a rescuer, insurer AIG struggled for survival and Merrill Lynch was snapped up by Bank of America, all of which unleashed a wave of global stock selling on Monday, when Hong Kong markets were closed for a holiday.

Analysts said fears over the US financial system would carry on plaguing the market and drag it yet lower as long as investors remain unsure whether US markets have hit bottom.