Nikkei dives, eyeing biggest fall since '87 crash

Thu Oct 9, 2008 9:05pm EDT

(Updates to midmorning)

TOKYO Oct 10 (Reuters) - The Nikkei average tumbled more than 11 percent on Friday, poised for its biggest one-day drop since the 1987 stock market crash, on fears of a global recession despite moves by global authorities to thaw frozen credit markets.

The stock sell-off led the Osaka Stock Exchange to trigger a circuit-breaker and briefly halt trade in the Nikkei futures.

"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.

"Fears about the U.S. financial system have been rekindled. The U.S. government is still debating whether it would inject money into financial institutions. It needs to act now even if that would be beyond the current law."

As of 0100 GMT, the benchmark Nikkei .N225 had recovered a little to be down 9.6 percent or 874.45 points at 8,283.04.

If the fall is sustained until the end of Friday, it will surpass a 9.4 percent fall in the Nikkei earlier this week, which is the biggest fall since a 14.9 percent one-day slide during the 1987 stock market crash.

The broader Topix .TOPX lost 7 percent to 841.98.

The Dow Jones industrial average .DJI dropped 7.3 percent to 8,579.19 on Thursday, with bank and insurance stocks hammered again, as the previous day's coordinated global interest-rate cuts and myriad other official measures to unfreeze money markets did little to boost confidence in the financial sector. (Reporting by Aiko Hayashi; Editing by Rodney Joyce)

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