South Korea's currency and main stock index have dropped after North Korea's state media said the country's leader Kim Jong-il had died.

朝鲜领导人金正日逝世的消息导致韩国货币和主要股票指数纷纷下跌。

The benchmark Kospi stock index fell as much as 4.9%. The currency, the won, was heading for its biggest daily drop in two months.

The Bank of Korea will hold an emergency meeting to discuss the death.

Analysts² said market volatility³ will remain amid questions about North Korea's succession plans.

"The shock on the market will be inevitable⁴ in the short term," said Bae Sung-Young from Hyundai Securities. "Judging from the past cases, I forecast the impact to last for two to three days only."

However the analyst¹ said that market volatility may last longer this time as the death came when the succession process still looks incomplete.

Power struggle

In September 2010, Mr Kim introduced his third son Kim Jong-un as his successor.

Analysts said that there may now be a power struggle, which could lead investors⁵ to avoid risky⁶ markets.

"We see more people trying to be a bit more cautious," said Roger Tan of SIAS Research in Singapore.

"Now there is a question mark over who's going to take the helm, and the markets are worried that there may be some instability, a fight for power over his position."

The South Korean won lost about 1.8% as news of Mr Kim's death spread, while the price of the country's bonds also dropped, pushing up government borrowing costs.

Other Asian markets were also down on the news. Japan's main Nikkei 225 stock index lost 0.8%. Hong Kong's Hang Seng slipped 2% and the Shanghai Composite Index dropped 2%.

"This is definitely a negative factor for markets with no detailed⁷ information on his death," said June Park at Meritz Securities in Seoul.

"It will drive the stockmarkets lower as geopolitical risks are rising and foreign investors could withdraw money out of South Korea."