Stock markets in Asia remain jittery, with fears of a U.S. recession continuing to cause major market fluctuation. As Naomi Martig reports from Hong Kong, financial analysts say that this may be the beginning of a long period of market instability.

Hong Kong's Hang Seng Index closed nearly 3.5 percent lower in limited trading, Thursday, while China's main stock index in Shanghai dropped to its lowest level in nine months, before rebounding to end one percent higher.

Share prices also fell in other major Asian stock exchanges.

The market fluctuations in Asia follow overnight losses on Wall Street, with the Dow Jones Industrial Average falling more than two percent.

Duncan Wooldridge is Chief Asia Economist for the bank UBS in Hong Kong. He says the declines in Asia stock markets reflect persistent investor concern over the American economy and the U.S. subprime mortgage crisis.

"It's not necessarily that the Fed is doing anything wrong, or not doing enough," he said. "You have certain pressures moving in a direction that just makes it very difficult to avoid outright recession."

Markets rebounded, Wednesday, after the U.S. Federal Reserve announced an interest rate cut. Analysts say Thursday's slowdown was caused by investors wanting to hold onto earnings from the previous day.

Earlier this week, the Fed also announced emergency measures to ease the liquidity crisis in credit markets.

Wooldridge says investors are not as concerned about whether or not there will be a U.S. recession as they are about how bad the predicted recession will be.

"And the implications that that may imply, because I think that's where there's actually more uncertainty in terms of what investors are thinking about," he said.

The dollar gained against the euro, after nearly a week of volatility, although volumes were reduced because markets in Japan are closed for the public holiday.

Financial markets in India, Indonesia, Malaysia, Pakistan and the Philippines were also closed for national holidays.

Oil prices fell, with American crude futures down 38 cents to $102.19 a barrel, far lower than Monday's record $111.80.

Gold prices also dropped more than two percent on Wednesday, their lowest level in one month.