A wave of panic selling engulfed Asian markets Friday, after US shares saw a record intraday fall on deepening fears that Greece's debt crisis would spread through Europe.
The Bank of Japan on Friday offered to provide over 20 billion dollars in liquidity to financial institutions as Tokyo stocks tumbled more than four percent at one point, their second successive sharp fall.
Seoul plunged 2.97 percent and Sydney dived 2.8 percent after world markets dropped on statements from European Central Bank President Jean-Claude Trichet that offered no sign of intervention to stop the euro's slide.
The euro fell to 1.2631 dollars from 1.2644 dollars in New York late Thursday, where the unit at one point hit 1.2523, its lowest since March 2009.
|A currency trader is seen in front of a stock index board in the Korea Exchange Bank in Seoul. A wave of panic selling engulfed Asian markets Friday, after US shares saw a record intraday fall on deepening fears that Greece's debt crisis would spread through Europe.|
Markets have been spooked by violent demonstrations in Athens this week where three people were killed in a bank firebombing, amid growing fears a 110-billion-euro (145-billion-dollar) EU-IMF bailout for Greece could prove insufficient.
Concerns are also mounting that the deal will fail to shield Spain and Portugal from crippling market pressures.
"The reason for today's fall is what everybody knows -- Greece," said Hideaki Higashi, a strategist at SMBC Friend Securities.
"The market is factoring in the possibility that this Greek problem will spread to Spain and Portugal."
The region's traders took their cue from a record drop of almost 1,000 points on the Dow Jones Industrial Average before it recouped more than half those losses on Thursday.
The drop eclipsed even the crashes seen when markets reopened after September 11, 2001 and in the wake of the Lehman Brothers collapse.
The Dow later recovered, closing nearly four percent down, but spooked traders were left wondering whether a glitch had caused the blue-chip index to erode three months of solid gains.
In Tokyo the Bank of Japan on Friday offered to provide two trillion yen (21.8 billion dollars) in liquidity to financial institutions against the banks' collateral pooled at the BoJ.
"The Bank of Japan aims to increase a sense of security in the markets by providing ample funds," said BoJ official Yuichi Adachi.
Chief government spokesman Hirofumi Hirano told a regular press conference that Japan must ensure that Greece's problems won't affect the Japanese economy, the world's second largest.
"These European concerns have taken a big turn for the worse," said analyst Ben Potter of IG Markets. "It?s going to be a very dark day across the board."