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LONDON : World stock markets were mixed on Friday as European equities attempted a rebound after Tokyo plunged dramatically when investors dumped shares to escape the burgeoning credit crisis.
Markets in Paris and London clawed back some ground on Friday at the end of a harrowing week which saw a fierce global sell-off sparked by fears that US housing market woes could infect the world economy.
But in Asia, share prices skidded lower as investors reacted to more bad news linked to the US housing sector, after further overnight falls in New York.
Traders remain worried that problems in the US mortgage sector could spark a full-blown credit crunch.
"Some deep flaws still remain in the credit market across the Atlantic and the impact this is having elsewhere looks set to continue being felt for some time yet," said CMC Markets trader Adam Neal.
Overnight, Wall Street fell deep into the red before recovering much of the losses to close slightly lower after another volatile day.
Investors expect more of the same when US markets reopen at 1330 GMT.
After a hesitant start to Friday, London's FTSE 100 index of leading shares jumped 0.84 percent higher to 5,908.00 points.
On Thursday, the FTSE had nosedived by 4.10 percent -- the biggest fall since March 12, 2003 during the run-up to the US-led war on Iraq -- as concerns mounted over companies with exposure to the subprime, or high-risk, home loan sector in the United States.
In Paris on Friday, the CAC 40 index won back 0.57 percent to 5,295.33 points, while Frankfurt's DAX 30 index fell 0.20 percent to 7,255.59.
Heavy selling in Tokyo -- Asia's largest bourse -- quickly spread across Asia on Friday, with major markets down by more than five percent as investors scrambled to exit the market fearing further heavy losses.
Japanese share prices closed with a massive 5.42 percent loss, suffering the biggest one-day points drop since April 2000.
"The market is in a very bad state right now," said Fumiaki Nakanishi, head of market research at SMBC Friend Securities.
Hong Kong share prices closed 1.40 percent lower on Friday, but reversed earlier sharp losses of 6.0 percent due to bargain hunting, dealers said.
Investors fled "the crashing stock markets and headed to the safer bond market," said Akihiko Inoue, a strategist at Mizuho Investors Securities.
Seoul closed 3.1 percent lower after plunging nearly seven percent Thursday -- its biggest ever one-day point decline.
Around Asia, markets buckled again under heavy selling.
Shanghai finished down 2.28 percent, Mumbai was off 2.33 percent, Bangkok declined 0.61 percent while Kuala Lumpur fell 5.08 percent and Manila ended two percent lower.
The Australian and Japanese central banks injected extra liquidity into the banking system again Friday to try to calm markets.
In recent days, central banks around the world have together pumped billions of dollars into the global financial system amid signs that private banks and firms are having trouble raising funds and rolling over debt.
But British financial institutions have not asked the Bank of England to pump cash into the money markets, finance minister Alistair Darling said Friday.
Darling added that the British and the world economy was strong -- despite ongoing problems in the troubled US housing sector.
"There are difficulties with the US housing market, but I think fundamentally the world economy is strong and the prospects are good," he said.
- AFP
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