BANGKOK (AP) -- Asian stocks dropped sharply Monday as the first-ever downgrade of the U.S. government's credit rating jolted the global financial system, reinforcing fears of a rapid slowdown in economic growth.Oil prices extended recent sharp losses, trading below $85 a barrel on expectations that slower global growth will crimp demand for crude. The dollar was lower against the yen and the euro.Among the major Asian markets, Hong Kong's Hang Seng tumbled 4 percent to 20,109.49 and South Korea's Kospi slid 3.3 percent to 1,879.93. Japan's Nikkei 225 stock average was down 1.3 percent to 9,178.03 by its midday break.Futures pointed to losses on Wall Street when it opens Monday. Dow futures were off 225 points, or 2 percent, at 11,177 and broader S&P 500 futures shed 25.5 points, or 2.1 percent, to 1,172.42.Standard & Poor's downgrade of the U.S. sovereign credit rating to AA+ from the top-notch AAA, announced late Friday, was yet another blow to confidence in the struggling U.S. economy. It adds to growing fears that the world's No. 1 economy may be headed back into recession.Those anxieties have been compounded by signs that Europe's government debt crisis is threatening to engulf bigger economies such as Italy and Spain.David Cohen of Action Economics in Singapore said the downgrade caused already nervous investors to flee riskier assets such as stocks but need not derail the U.S. economic recovery even if it is sluggish."Clearly, the downgrade fed the anxiety that was evident in global markets last week," Cohen said. "But we need not see another global financial crisis as long as people can calm down quickly enough."Elsewhere in Asia, Australia's S&P/ASX 200 index dropped 1.8 percent to 4,030.80. Singapore's benchmark dived 3.7 percent, Taiwan's market slid 2.6 percent and China's Shanghai Composite shed 3 percent."I think it's still a matter of people being cautious given they don't really know how wildly these overseas markets will respond," Westpac Banking Corp. chief economist Bill Evans told Australian Broadcasting Corp. television."I would expect people will take the risk off the table at the moment waiting for some more clarity in those two big issues: how will the U.S. respond to the downgrade and will the Europeans settle down these concerns in Europe?" he said.Meanwhile, a flurry of weekend activity by global finance officials gave rise to hopes of coordinated action to prevent a market meltdown.Seeking to calm the panic spreading across financial markets, finance officials from the Group of Seven industrial countries issued a joint statement late Sunday saying they were committed to taking all necessary measures to support financial stability and growth.The G-7 statement came after the group held an emergency conference call to discuss the debt crisis in Europe and market prospects following the announcement of the first-ever downgrade of the credit rating of the U.S. government.The European Central Bank, meanwhile, said it will "actively implement" a bond-purchase program that could boost Spanish and Italian bonds and drive down interest yields that threaten those countries with financial disaster.The burst of activity underscored how government debt levels in Europe and the U.S. have unsettled financial markets -- and sharpened fears that debt troubles could derail the global recovery from the 2007-2009 financial crisis.The Dow fell 5.8 percent last week amid dour U.S. economic news. It plunged 513 points on Thursday alone, the worst day for the Dow since the global financial crisis erupted in 2008.Benchmark oil for September delivery was down $2.31 to $84.57 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 25 cents to settle at $86.88 on Friday.In London, Brent crude was down $2.46 at $106.91 per barrel on the ICE Futures exchange.In currencies, the dollar weakened to 78.11 yen from 78.34 yen late Friday in New York. The euro rose to $1.4331 from $1.4265.Associated Press Writer Rod McGuirk in Canberra, Australia contributed.