Central banks step in as stocks plunge in Asia, Europe

— -- Central banks around the world injected money into the financial system overnight as the stock plunge that started in Europe Thursday continued into Friday.

Asian and European stocks plunged and U.S. stock futures pointed to a lower opening 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, including the central banks of Australia and Canada, in pouring cash into money markets to calm growing jitters.

Overnight, the Nikkei 225 index dropped 406.51 points, or 2.37%, 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%, to 1,633.93.

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

Asian markets across the region followed the general slump.

In Europe Friday, Britain's FTSE 100 stock index dropped 3%, turning negative for the year for the first time since 2002.

Germany's DAX index lost 1.7%, and France's CAC 40, which also turned negative for the year, tumbled 3%.

The plunge in Asia and, for a second day in Europe, came after the Dow Jones industrial average fell 387.18, or 2.83%, 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 $8.39 billion into money markets to curb rises in a key overnight interest rate.

The injection followed similar moves by European and U.S. central banks.

The Reserve Bank of Australia injected 4.95 billion Australian dollars ($4.19 billion; 3.05 billion euros) into the money market, more than double the daily average.

And central banks in South Korea and Singapore said they were prepared to intervene if needed, although Jang Byung-Wha, director-general in the Bank of Korea's financial markets department, said Korean financial institutions had not invested large amounts in subprime mortgages.