The fall follows a sharp selloff on US and European markets amid fears of another world economic downturn.

IMAGE Asian markets have tumbled following the global plunge over concerns about Europe's debt crisis and US economic growth.

Tokyo shares plunged 4.09 per cent in early trade on Friday, following a sharp selloff on US and European markets.

The Nikkei index at the Tokyo Stock Exchange dropped 395.09 points in eight minutes to stand at 9,264.09, before the initial sharp plunge stopped.

The broader Topix index of all first section shares traded 3.50 per cent or 28.93 points lower at 797.43, off the earlier low of 794.16.

South Korean shares also opened down 4.0 per cent on Friday, at their lowest level since March.

The benchmark KOSPI index was at 1,937.17, down 81.30 points.

The index had lost 7.1 per cent in the three sessions from Tuesday to Thursday, one of the steepest falls among major Asian markets.

Similarly, Australian stocks plunged more than four per cent in early trade on Friday following carnage on US and European markets overnight over fears of another world economic downturn.

At 1010 am (0010 GMT), the benchmark S&P/ASX 200 was 174 points lower at 4,102 after the Dow Jones Industrial Average dropped 4.3 per cent on Thursday, its worst one-day fall in more than two years.

Worst selloff

Investors have fled stock markets on both sides of the Atlantic in the worst stock-market selloff since the depths of the recession in early 2009 in what has turned into a full-fledged correction.

The Dow Jones and the S&P fell more than four per cent and the Nasdaq lost five per cent on Thursday on fear that the US is heading for another recession and that Europe's sovereign debt crisis is spreading to two of its largest economies.

European stocks fell to a level not seen since after the financial crisis in mid-2009, with Italy's equity market firmly in bear market territory - down nearly 30 per cent since February - as investors worried the eurozone debt crisis was spreading.

Italy's blue-chip FTSE MIB index was suspended about 30 minutes before the close. The index fell slightly more than five per cent.

Analysts predicted further losses even though stocks have fallen on nine of the last 10 days. Two-year US treasury yields fell to a record low as investors sought safety in short-term government bonds.

The S&P 500's drop puts it more than 10 per cent below its April 29 high, considered a correction.

More than 13bn shares changed hands, making it the busiest trading day in more than a year. Decliners beat advancers on the New York Stock Exchange by about 19 to 1.

Worsening data

The market's malaise springs from a number of factors. US economic data has worsened, suggesting slowing growth from an already sluggish pace in the first half.

Reporting from New York, Al Jazeera's Scott Heidler explained: 'You can blame it partially on Europe, but also the economy here in the United States is very sluggish. Not only is it slow, the concern is how are they going to kick start it. There's no saviour out there.'

Moreover, he said, worried Americans' shaken confidence in the markets may exacerbate the problem.

'Those Americans who don't even invest in the market, they look to the market and if its going down, they stop their spending.'

Meanwhile, Europe's sovereign debt crisis has defied remedies and threatens to engulf large eurozone economies Spain and Italy.

'The debt troubles in Europe, especially with the yields on Italian and Spanish government bonds soaring, are making investors gather as much liquidity as possible,' Stephen Massocca, managing director of Wedbush Morgan in San Francisco, said.

The Dow Jones industrial average was down 512.46 points, or 4.31 per cent, at 11,383.98. The Standard & Poor's 500 Index fell 60.21 points, or 4.78 per cent, at 1,200.13. The Nasdaq Composite Index lost 136.68 points, or 5.08 per cent, at 2,556.39.

Some 13.8bn shares changed hands on the New York Stock Exchange, NYSE Amex and Nasdaq, the highest since June 25, 2010, and well above the daily average of around 7.48bn.

Losses occurred in all sectors. Among stocks hitting new 52-week lows were Bank of America, down 7.4 per cent at $8.83, Citigroup, down 6.6 per cent at $34.81, and Hewlett-Packard, down 5.1 per cent at $32.54.

Among sectors, losses in energy and materials outpaced others, with S&P energy down 6.8 per cent and materials down more than 6.6 per cent.

US crude futures settled down $5.30 to $86.63 a barrel in New York.

Biggest rise

The CBOE Volatility index jumped 35.4 per cent to 31.66, its highest since July 2010. It was the biggest rise since February 2007.

The European Central Bank indicated it was buying government bonds in response to a deepening European debt crisis.

With investors seemingly caught in a perfect storm, officials around the world moved to calm markets.

The boldest step came from Tokyo, where the government spent an estimated 1tn yen ($13bn) to rein in the strength of its currency on Thursday.

The Japanese intervention came a day after an unexpected cut in interest rates by Switzerland to weaken the franc, which has jumped in recent days as investors seek safe havens.

The currency edged slightly higher in New York trade on Thursday.

Even gold, which has raced to a series of highs near $1,700 an ounce amid the gathering uncertainty, fell as deepening losses on Wall Street prompted investors to sell the metal and cover losses to meet margin calls outside of the commodity sector.

Source: Al Jazeera and agencies