Mumbai: The European Central Bank (ECB) injected an additional €61 billion ($83.9 billion) into the banking system to calm panicky credit markets in a second day of action amid signs that US subprime mortgage worries were digging deeper into the world economy.

The news helped steady nervous European money markets, where ECB had injected a record euro94.8 billion ($130.6 billion) cash the previous day.

But the measure did not cool off stock markets where major indexes plunged across world markets - in London, Paris and Tokyo.

Asian central banks also joined a concerted campaign by US, European and Canadian monetary authorities to inject extra cash into banking systems.

Bank of Japan and the Reserve Bank of Australia have added more money than usual to prevent short-term rates from spiking, though on a much smaller scale.

Japan's central bank injected 1 trillion yen ($8.4 billion) into money markets while the US Federal Reserve added $24 billion. The Canadian central bank also joined in. Central banks of Malaysia, Indonesia, the Philippines and Taiwan too stepped in to support their currencies by selling US dollars, traders said, as escalating credit market worries hit risky assets around the region.

Defaults on subprime loans (those made to people with poor credit) have climbed sharply in the United States in recent months and have triggered concern about the impact on credit markets worldwide. Most of the banks and companies affected were also in the US.

But in Germany, insurer Allianz SE, which owns Dresdner Bank AG, revealed last week that it has €1.7 billion ($2.3 billion) of exposure to the US subprime market - or about 0.16 per cent of its €1.03 trillion ($1.41 trillon) in total investments.

West L B Mellon Asset Management, the asset management joint venture of German state bank West LB AG and The Bank of New York Mellon Corp., suspended redemptions this week from its asset-backed securities ABS Fund, which is part of the West LB Mellon Compass Fund.

Other companies, including Union Investment Asset Management, a German mutual fund manager, and Frankfurt Trust, a unit of BHF-Bank, have also halted redemptions.

Matters came to a head after French bank BNP Paribas SA announced the suspension of three asset-backed securities funds, saying it could not value them accurately.

This prompted ECB, which sets monetary policy for Germany, France and 11 other EU nations, to announce its first move.

Analysts, meanwhile, expressed caution at the central bank's massive response to the drying up of liquidity, saying the ECB was taking a risk with the huge infusion as it could create a crisis in confidence.

Even though Asian institutions appear to have little direct exposure to the US subprime mortgage market, which lends to people with poor credit histories, analysts have said that Asia was likely to suffer as investors offset losses in the United States by trying to cash in on profits earned in Asia.

Central bankers in Asia has a double problem: While they might like to tighten interest rates to enforce greater caution among investors and prevent capital flight, they also need to avoid tightening to the point that banks and funds have trouble meeting demands for payment as investors sell.

While the Reserve Bank of India has curbed money supply through a hike in reserve requirements, the South Korean central bank raised its benchmark interest rate to 5 per cent, citing excess liquidity.

Korean central bankers are currently holding meetings on how to handle fears of a liquidity crunch. The bank also said it stood ready to inject funds into the money market, echoing a similar statement by the Singaporean central bank.