(UPI) – The Dow Jones industrial average opened with a 600-point plunge Friday, continuing its streak of negativity.

 
The fall followed hard knocks in Asian and European markets, which also fell. The Hang Seng stock market in Hong Kong, lost 7.2, while the S&P/ASX 200 index in Australia fell 8.3 in its largest single-day drop on record.

Trading at the Vienna Stock Exchange was halted after stocks fell 10 percent at the opening bell, The Wall Street Journal reported.

The DJIA fell to 8,333.07 in midmoring trading, off 3.61 percent on a loss of 310.07 points.

The Standard & Poor's 500 lost 32.70 points, off 3.59 percent, to 877.22. The Nasdaq composite index lost 1.93 percent to 1,613.36, down 31.76 points.

The benchmark 10-year U.S. Treasury bond fell 23/32 to yield 3.871 percent.

The dollar was mixed. The euro fell to $1.3573, compared to $1.3609 Thursday.

Against the Japanese yen, the dollar fell to 99.01 yen, from 99.91 yen Thursday.

In Tokyo, the Nikkei average lost 9.62 percent, down 881.06 points to 8,276.43.

HONG KONG/NEW YORK (Reuters) - Fearful selling clenched Asian markets on Friday after U.S. stocks plunged, heaping pressure on economic powers to halt a global spiral of financial distress and slowing growth.

With financial policy makers from the Group of Seven major industrial nations due to meet in Washington later on Friday, bank bailouts, liquidity injections and interest rate cuts across the world have failed to quell investor anxiety.

Japan's Nikkei average tumbled more than 11 percent, leaving it facing the biggest one-day drop since a 1987 crash. The Kyodo news agency reported that the Tokyo Stock Exchange suspended some trading in futures and options for around 15 minutes.

Hong Kong's Hang Seng index opened down 7.7 percent.

"No one is buying. Fundamentals don't matter any more and there's no explanation for such a plunge," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.

Overnight, U.S. stocks slumped more than 7 percent on fears that credit markets would stay frozen, paralyzing the world's financial system and slowing economies to a standstill.

At the center of a financial crisis now almost a month old, credit markets remained in deep distress. With banks desperate to protect capital, the interbank cost of borrowing dollars rocketed. Three-month interbank rates for dollar loans hit their highest level of the year.

The cost of protection against defaults in Asia's sovereign and corporate debt also soared to record highs on Friday on fears financial crisis would spread to the region.

"Equity and fixed income markets seem to be stuck in a negative feedback loop as the lack of interbank lending and funding and waning investor confidence keep pushing one another," UBS currency strategists said in a note to clients.

DEEP DISTRESS

Indonesia dropped plans to reopen its stock market after a two-day suspension and despite policy makers unveiling new measures aimed at calming fears that Southeast Asia's top economy faces a new crisis.

In South Korea, where there is also growing panic, the finance minister will fly to New York where, on the sidelines of the annual IMF/World Bank meetings, he will meet leading U.S. bank executives to seek expanded credit lines for his country's banks.

Singapore said its export-dependent economy had sunk into its first recession in six years, and eased monetary policy.

In the latest attempt to instill confidence in the financial system, the U.S. and Dutch governments readied on Thursday public funds to shore up the capital of banks, matching a similar move this week by Britain.

The U.S. Treasury plans to start injecting capital in U.S. banks as soon as this month, according to a financial policy source familiar with Treasury Secretary Henry Paulson's thinking.

That partial nationalization of American banks would represent an enlarged role for the U.S. government as the lender and investor of last resort.

Until now, U.S. policy has focused on a plan to buy banks' distressed assets, but many analysts say a move to shore up banks' capital would be a more direct way to break a logjam in credit markets that has shut down new borrowing for consumers and businesses.

In a sign of the escalating pressure on banks, direct borrowing from the Federal Reserve climbed to a record for a second straight week and has averaged $420 billion per day. The Dutch government also announced it was setting aside 20 billion euros ($27.5 billion) of capital to protect banks and said other European governments were planning similar measures.

But the Dow Jones industrial average dived over 7 percent to below 8,600 points for the first time since May 2003.

HOPES ON G7 meeting

U.S. stocks have now lost $2.3 trillion this week and $8.3 trillion over the past year, according to the Dow Jones Wilshire 500, the broadest measure of U.S. equities available.

"The market is in a phase now that it doesn't believe in anything," said Sasha Kostadinov, a fund manager and analyst for Shaker Investments in Cleveland, Ohio. "I don't know what will turn the sentiment."

The punishing decline in U.S. stocks added to pressure on policy makers to do more to stem the crisis -- even after approval of a $700 billion U.S. bailout fund and an emergency rate cut by central banks over the past week.

This week, central banks from Europe and the United States to China, South Korea and Taiwan have slashed interest rates, as fears of inflation recede into worries about economic growth.

Japan is considering other measures in the face of new recessionary signals.

G7 finance ministers and central bankers meet in Washington on Friday amid expectations that the group will present a united front on policy to contain the crisis.

"Various countries have done bits and pieces. Nobody has done all of them," said David Mackie, head of Western European economic research at JPMorgan. "It's not entirely obvious that these measures are turning the tide."

"At the end of the day, if you socialize enough of the financial system, it has to work," said Mackie.

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WAUKEGAN, Illinois (Reuters) - The bleak outlook for the U.S. economy and the worst credit crunch in decades are pushing many stressed-out consumers to learn some new skills -- budgeting and saving.

The trend was on display at a free seminar called "Building a Better Budget" in this working class suburb north of Chicago on Wednesday night. An overflow crowd of 180 people showed up to hear advice of how to make ends meet in tough times.

"I know for many of us saving is a foreign concept," Lizbeth Sanchez, a manager at financial counseling service Balance told the crowd.

"It's not easy to save because the way our culture works, the person who dies with the most stuff wins, right?"

Almost no one cracked a smile.

Dianne Miller, 44, an insurance agent, lamented the fact that she bought too much too fast during the U.S. housing boom, including an expensive new car. Now she is saddled with debt.

"I'm here because I want to get out of debt," she said. "To do that I'm going to have get a second job, start saving and go without.

"I'm not alone, look at the way we Americans have spent money," Miller added. "We're all going to have to go without."

Sales clerk Maria Miranda, 31, wants to plan for the future of her two small children and said she will probably start her budgeting by going for a less expensive cell phone package.

"I'm scared about what's happening to the economy," she said. "But I have to balance my own budget before I can start worrying about anyone else."

'THIS IS KILLING ME'

As Sanchez rolled through ways to manage your budget so you can save money -- including opting for cheaper cell phone package deals -- many of the people packed into the conference room at the Ramada Inn looked battered and discouraged.

"This is killing me," said local resident Danielle Sampson, holding her head in her hands.

Sampson, 40, a dental assistant, said she had two daughters in college and could not take on any more debt.

"My spending has exceeded my income and that has to stop," she said. "All of us are going to have to adjust."

That mood is washing across the country. On Tuesday the U.S. Federal Reserve reported that outstanding consumer credit fell $7.9 billion in August, the first shrinkage in that measure since January 1998.

As belts tighten, the economy could suffer since U.S. consumer spending accounts for at least two-thirds of overall demand. On Thursday shares of General Motors Corp., the largest U.S.-based automaker, fell to their lowest level since 1950.

But those at the seminar, while worried about the economy, were more worried about their own household economy. Marilyn Kucia, a consumer credit counselor, said she has been inundated with clients struggling with debt.

"I've come looking for some fresh ideas of what to tell people because I'm running out," she said. "I also thought that I was well protected financially, but with everything that's going on, I am not so sure anymore."

The event was organized by the Consumers Credit Union, a financial cooperative owned and controlled by its 50,000 members in Illinois and Wisconsin.

"Are our members struggling? Sure they are," said CCU vice president Hal Coxon. "Employers are cutting back on overtime, and food and gas prices are still high."

Volunteer Mary Krause says she has helped out at budgeting seminars for a decade and never seen anything like this.

"The state of the economy and the lack of easy credit have really focused people's minds," she said.

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Copyright 2008 Reuters. click for restrictions