Asian Stocks Plummet Over U.S. Credit Fears

Asian stocks plunged Friday as fallout spread from global market turmoil set off by concerns about credit weakness in the U.S. The Bank of Japan joined its U.S. and European counterparts in pouring cash into money markets to calm growing jitters.

The Nikkei 225 index dropped 406.51 points, or 2.37 percent, to close at 16,764.09 points on the Tokyo Stock Exchange. The broader Topix index of all shares on the exchange's first section sank 49.88 points, or 2.96 percent, to 1,633.93 points.

The Korea Composite Stock Price Index fell 80.19 points, or 4.2 percent, to 1,828.49, with issues falling across the board, especially financial stocks. The Kospi fell as much as 5 percent in intraday trade.

Asian markets across the region followed the general slump.

Hong Kong's blue chip Hang Seng Index was down 3 percent midday at 21,771.94. Singapore's Straits Times Index was down 2.89 percent by midday at 3,314.37. The Phillipine benchmark index was also off 3 percent, and the standard market measure in Australia finished down 3.7 percent.

The plunge came after the Dow Jones industrial average fell 387.18, or 2.83 percent, to 13,270.68 in New York on Thursday after a French bank announced it was freezing funds that invested in U.S. subprime mortgages, deepening fears of a credit crunch.

Amid Friday's decline, the Bank of Japan said it injected 1 trillion yen ($8.39 billion) into money markets to curb rises in a key overnight interest rate.

The injection followed similar moves by its European and U.S. counterparts overnight.

The European Central Bank provided more than $130 billion to money markets, the bank's biggest infusion ever.

The U.S. Federal Reserve also added a larger-than-normal $24 billion in temporary reserves to the U.S. banking system.

In South Korea early Friday, blue chip stocks Samsung Electronics Co., the country's largest corporation, and Posco, the world's fourth-largest steelmaker, were down 2.6 percent and 3.6 percent, respectively.

Moves in international markets affect the Korean index, said Kang Moon-sung, a strategist at Korea Investment and Securities Co.

"So no one is confident this level is (the) bottom," Kang said.

The index has been on a tear for most of this year, rising as much as 40 percent. Last month, the benchmark closed past 2,000 for the first time.

Japan's government spokesman Yasuhisa Shiozaki tried to play down the fears about the fallout on the world's second largest economy.

"Our economy is recovering smoothly, spurred by private sector demand," Shiozaki told reporters Friday. "The government will continue to closely watch share prices and overall economic indicators," he said.