Mumbai: Nervous markets the world over took a beating after French banking giant BNP Paribas said it had closed three US mortgage-laden hedge funds to redemptions, just one week after saying its exposure to the sector was not significant.

An injection of $130 billion in emergency loans to banks by the European Central Bank also failed to stem the slide. The actions weighed heavily on the Dow Jones industrial average, which closed down 387.11 points on August 9.

Stock markets on both sides of the Atlantic tumbled. On Wall Street, the Dow Jones industrial average plunged 387.18 points, or 2.8 per cent, to 13,270.68, its largest one-day loss since February.

London's FTSE 100 dropped 2.7 per cent to 6,100. 80, the CAC-40 in Paris fell 2.6 per cent to 5,480.64 and Germany's DAX index down 1.6 per cent to 7,334.43.

Asian stocks also plunged on concerns about credit weakness in the US. The Nikkei 225 index dropped 406.51 points, or 2.37 per cent, to close at 16,764.09 points on the Tokyo Stock Exchange. The broader Topix index of all shares on the exchange's first section sank 49.88 points, or 2.96 per cent, to 1,633.93 points.

The Korea Composite Stock Price Index fell 80.19 points, or 4.2 per cent, to 1,828.49, with issues falling across the board, especially financial stocks. The Kospi fell as much as 5 per cent in intraday trade.

Hong Kong's blue chip Hang Seng Index was down 3 per cent midday at 21,771.94. Singapore's Straits Times Index was down 2.89 per cent by midday at 3,314.37. The Philippine benchmark index was also off 3 per cent, and the standard market measure in Australia finished down 3.7 per cent.

Asian stocks fell sharply and the yen extended its gains as investors dumped riskier assets. The flight to safety shored up Japanese government bonds and US Treasuries.