World Stocks Plunge on Credit Fears

LONDON -- Stock markets plunged worldwide Friday with turmoil from the U.S. mortgage crisis rippling across the globe.

Stock markets in Europe tumbled, unappeased by the European Central Bank's decision to inject another $83.9 billion into the banking system Friday, a day after it provided almost $130.8 billion, the bank's biggest infusion ever.

London's FTSE 100 dropped 2.6 percent to 6,107.50, the CAC-40 in Paris fell 2.4 percent to 5,491.81 and Germany's DAX index was down 1.7 percent to 7,330.21.

Wall Street also skidded again Friday as investors again succumbed to anxiety over tight credit conditions. The Federal Reserve said it would do all it can to "facilitate the orderly functioning of financial markets."

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In early trading, the Dow Jones industrials dropped 82.92, or 0.62 percent, to 13,187.76, adding to a 387-point plunge on Thursday and extending a series of triple-digit moves that began in late July. Broader stock indicators also declined. The Standard & Poor's 500 index fell 10.58, or 0.73 percent, to 1,442.51, and the Nasdaq composite index fell 24.30, or 0.95 percent, to 2,532.19.

Early Friday, the New York Fed announced a three-day repurchase agreement, or "repo," to inject liquidity into the market. The Fed had stepped in Thursday, too, injecting a larger-than-normal $24 billion in temporary reserves to the U.S. banking system

Matt Buckland, at CMC Markets, said heavy losses on Wall Street on Thursday, along with a lack of economic or corporate data due for release during the session, would continue to push markets lower. The recent market volatility has wiped more than 500 points off London's benchmark index over the last month.

"Critically, many are now going to be looking for that big 6,000 level on the London index," he said.

Many of the declines were in the banking sector, with Commerzbank down 4.7 percent, Deutsche Bank dropping 6.1 percent, Societe Generale falling 5.8 percent and BNP Paribas — which on Thursday announced the suspension of three asset-backed securities funds, saying it could not value them accurately — off 4 percent.

Allianz shares fell nearly 3 percent after saying it has $2.3 billion of exposure to the U.S. subprime market — or about 0.16 percent of its 1.03 trillion euros ($1.41 trillion) in total investments.

In Asia, 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 Bank of Japan joined its U.S. and European counterparts in pouring in cash into money markets to calm growing jitters.

In Asia, short-term investors led the selling on concerns that hemorrhaging in the subprime sector could spill over, said Song Seng Wun, regional economist with Singapore's CIMB-GK Research Pte.

"There is no answer at this point," Song said. "But there hasn't been any panic selling. The long-term people are still looking and waiting."

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.

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

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

Asian markets across the region have followed the general slump.

Hong Kong's blue chip Hang Seng Index shed 646.7 points, or 2.9 percent, to finish at 21,792.70.

Singapore's Straits Times Index closed down 54 points, or 1.6 percent, to 3,359.20.

Markets fell also in Bangkok, Jakarta, Kuala Lumpur, Manila, Mumbai, Shanghai, Singapore, Sydney, Taipei and New Zealand.

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