MercoPress. South Atlantic News Agency

US and EU markets negative sentiment extends to Asian stocks with record losses

G20 brought some calm saying they were “ready to take action” in support of banking systems and financial markets

Asian stocks have fallen on Friday, with some indexes driving towards their worst weekly losses since 2008. The Group of 20 nations said they were ready to preserve stability in the financial markets.

But South Korea's main Kospi index still lost 4.7%, while Australia's ASX shed 1.2%. The decline was first triggered by warnings from the IMF and World Bank about the strength of the global economy.

Asian shares were following losses on Thursday in the US and Europe where main indexes lost about 5%. A number of gloomy comments about global growth combined to sour market sentiment.

On Thursday, Christine Lagarde, head of IMF, said that the economic situation was entering a “dangerous place”. Robert Zoellick, the World Bank President, said separately that he thought the world was in a “danger zone”.

These comments, along with weak economic data out of China, sent Taiwan's main index sliding by 3.5% and Hong Kong's down almost 2%.

Japan's Nikkei index is closed for a holiday. Earlier in the day in New York the DJI was down 3.51% and Nasdq, 3.25%. In Europe the FTSE slid 4.67%; Dax, 4.96% and CAC40, 5.25%.

The negative sentiment weighed on markets despite attempts by policymakers to inject some urgency into their attempts to fix the European debt crisis.

The G20 countries, which are also meeting in Washington alongside the IMF and World Bank, said they were ready to take action.

“We commit to take all necessary actions to preserve the stability of banking systems and financial markets as required,” G20 officials said in a communiqué after a dinner meeting to discuss the European crisis.

Analysts said the markets were expecting some concrete action from the group, and so the comments were unlikely to alleviate the current turmoil.

It may not have calmed the markets, but the statement from the G20 helped the Euro recover losses on Friday. The Euro strengthened 0.5% against the US dollar to $1.3530, rebounding from a 0.8% drop.

The currency also climbed 0.6% versus the Yen to 103.24 yen, the first gain in six days.