Asian stocks plunge on credit fears

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TOKYO, Aug 10(Agencies): Asian stocks plunged Friday as fallout spread across the region from global market turmoil set off by a US mortgage problem.
News that the US, Eurozone, Japanese and other central banks had pumped massive amounts of cash into the financial system only appeared to add to the sense of nervousness on global markets about the US mortgage market troubles.
A global stock market rout hammered the Asian bourses after heavy losses on US and European markets as investors fled for shelter from the US housing woes, dealers said.
The Nikkei 225 index dropped 406.51 points, or 2.37 per cent, 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 per cent, to 1,633.93 points.
The Korea Composite Stock Price Index fell 80.19 points, or 4.2 per cent, to 1,828.49, with issues falling across the board, especially financial stocks. The Kospi fell as much as 5 per cent in intraday trade.
The plunge came after the Dow Jones industrial average fell 387.18, or 2.83 per cent, to 13,270.68 in New York on Thursday after a French bank announced it was freezing funds that invested in US subprime mortgages, deepening fears of a credit crunch.
Amid Friday's decline, the Bank of Japan said it injected 1.0 trillion yen ($8.39 billion) into money markets to curb rises in a key overnight interest rate.
The Bank of Japan joined similar overnight moves by the US and European counterparts - the first time the central banks took such action together since the Sept. 11, 2001, terrorist attacks.
The Australian central bank also followed suit.
The European Central Bank provided nearly euro95 billion ($130.8 billion) to money markets, the bank's biggest infusion ever.
The US Federal Reserve also added a larger-than-normal $24 billion in temporary reserves to the US banking system.
South Korean blue chip stocks including Samsung Electronics Co., the country's largest corporation, Posco, the world's fourth-largest steelmaker, and Hyundai Heavy Industries Co., the world's largest shipbuilder, declined.
Samsung fell 2.9 per cent to 603,000 won ($647), Posco slid 6.8 per cent to 490,000 won ($526), and Hyundai Heavy declined 6.9 per cent to 324,000 won ($348).
Moves in international markets affect the Korean index, said Kang Moon-sung, a strategist at Korea Investment and Securities Co.
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.
Asian markets across the region have followed the general slump.
Hong Kong's blue chip Hang Seng Index was down 3.0 per cent midday at 21771.94.
Singapore's Straits Times Index was down 2.89 per cent by midday at 3,314.37.
The Philippine benchmark index was also off 3 per cent, and the standard market measure in Australia was down 3.1 per cent.