RPT-GLOBAL MARKETS-Stocks plunge, yen surges as crisis spirals

* European leaders offer divided response to crisis

* Government bonds, yen climb with stability top priority

* MSCI Asia ex-Japan stocks index at lowest since Dec 2005 (Updates prices, adds European outlook)

By Kevin Plumberg

HONG KONG, Oct 6 (Reuters) - Asian stocks dropped by around 5 percent on Monday, led by exporters, and the yen surged to a 2-year high against the euro as investors doubted a scattered European response to the financial crisis and a $700 billion U.S. bank bailout could prevent a deeper slump in the global economy.

The need for stability drove up U.S. and Japanese government bond prices, especially after a report on Friday showed the U.S. economy in September shed the most jobs in 5-½ years.

Major European stock markets were expected to open as much as 4.7 percent lower, according to financial bookmakers, after Germany had to scramble to organise a rescue deal for lender Hypo Real Estate (HRXG.DE: Quote, Profile, Research, Stock Buzz) after an initial deal crumbled. The euro dropped to a 13-month low against the dollar below $1.36 <EUR=>.

JPMorgan and UBS economists have already predicted the world economy will slip into recession next year, using a common definition of annual growth in global gross domestic product at or below 2.5 percent.

Saul Eslake, chief economist with ANZ Bank in Sydney, does not predict a world recession but sees it as a growing risk.

"The fact that a lot of emerging market economies run current account surpluses insulates them to a degree from the consequences of what's going on in the global financial system," he said. "But they have real economy leakages through their exports and that means they have not decoupled and never were."

Japan's Nikkei share average .N225 ended down 4.25 percent, at its lowest close since February 2004. Sectors that derive their revenues mainly from exports, such as electrical equipment, machinery and auto makers, led the index lower.

The MSCI index of Asia-Pacific stocks outside Japan slid 5.35 percent .MIAPJ0000PUS to the lowest since December 2005.

Hong Kong's Hang Seng index .HSI was down 3.35 percent, with shares of China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz), China Construction Bank (0939.HK: Quote, Profile, Research, Stock Buzz) and HSBC (0005.HK: Quote, Profile, Research, Stock Buzz) paving the way lower.

"There's just nothing positive out there. Figures are bad in the States, Europe's bad, Japan's bad and China's probably slowing," said David Spry, research manager at broker FW Holst in Melbourne.

NO UNITY IN EUROPE

South Korea's KOSPI .KS11 was down 4.3 percent, led by shares of Samsung Electronics Co Ltd (005930.KS: Quote, Profile, Research, Stock Buzz) and POSCO (005490.KS: Quote, Profile, Research, Stock Buzz), the world's fourth-largest steelmaker.