Stocks slide amid subprime concerns

Regional bourses open sharply lower following Wall Street's steep decline.

    The plunge came after the Dow fell 387.18, or 2.83 per cent, to 13,270.68 in New York on Thursday [AP]

    The injections enable commercial banks to borrow from the central bank amid fears of a credit freeze linked to the US subprime market.


    European slide


    The ECB credits, which are in the form of loans, have come to more than the amount injected shortly after the  September 11, 2001 attacks in the US, which shook global financial markets.


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


    European stocks fell on Friday, surrendering what was left of gains made in 2007.


    Banking shares were badly hit, with the Royal Bank of Scotland down 4.5 per cent, Barclays down 5 per cent, ABN AMRO dropping 7 percent, and Credit Suisse falling 4 percent.


    At 11:11 GMT, the pan-European FTSEurofirst 300 index was down 2.9 percent at 1,481.84 points, its biggest one-day slide since May 2003.

    Markets suffer
    Joining Friday's decline, the Bank of Japan said it had injected $8.4bn into money markets to curb rises in a key overnight interest rate.
    Asian markets suffered dramatic losses on Friday morning after a large sell-off of stocks on the New York Stock Exchange the following day.  
    The Nikkei 225 index on Tokyo's Stock Exchange fell 2.61 per cent to 16,721.96 during the morning session on Friday, while the broader Topix index dropped by 2.91 per cent, to 1,634.87.
    Yasuhisa Siozaki, Japan's chief cabinet secretary, played down the concerns over the stock market slide and the apparent stumble in the US economy.
    "Apart from the decrease of housing construction, the US economy basically remains in gradual recovery," he said.
    "The Japanese economy is also recovering, driven by private sector demand. However, the government continues to monitor the overall economic market, including the stock market."
    Hong Kong stocks fell 3.1 per cent, and as of 10:28am (02:28 GMT), the Hang Seng index was down 694.51 points.
    The Korea Composite Stock Price Index fell 3.7 per cent, to 1,838.35 before making a slight recovery.

    Australia's benchmark S&P/ASX 200 dropped 2.8 per cent at 5,991.6, having been as low as 5,982.5 earlier in the session.


    Frozen funds


    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.


    The fall was precipitated by an announcement by French bank BNP Paribas that it was freezing three funds it had in invested in US subprime mortgages.


    BNP's disclosure came less than 10 days after DWS, the mutual funds arm of Deutsche Bank, the second-biggest bank in the eurozone, said it would not be affected by activities in the subprime market.


    Subprime mortgages are the most risky property loans, often offered to people who experiencing payment difficulties or those with a poor credit record.


    Several major US companies have announced losses from exposure to subprime loans over the past months.

    SOURCE: Agencies


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