Japan's Nikkei and South Korea's main stock index fall after Wall Street slide

TOKYO (AP) - 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 per cent, to close at 16,764.09 points on the Tokyo Stock Exchange. The broader Topix index, which includes all shares on the exchange's first section, fell 49.88 points, or 2.96 per cent, to 1,633.93.

The Korea Composite Stock Price Index fell as much as 80.88 points, or 4.24 per cent, to 1,827.80 with issues falling across the board, especially financial stocks.

Asian markets across the region followed the general slump.

Hong Kong's blue chip Hang Seng Index was down three per cent midday at 21,771.94. Singapore's Straits Times Index was down 3.4 per cent at 3,298.88. The Philippine benchmark index was also off three per cent, and the standard market measure in Australia was down 2.8 per cent.

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 U.S. subprime mortgages, deepening fears of a credit crunch.

Amid Friday's decline, the Bank of Japan said it injected 1 trillion yen (US$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 per cent and 3.6 per cent, 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 per cent. 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.

© The Canadian Press, 2007