HONG KONG (Reuters) - Stocks tumbled and government bonds rose on Friday as investors dumped risky assets amid a global credit squeeze, while Asian central banks weighed in to calm jittery money markets or prop up their currencies.
Asia's major stock markets fell as much as 4 percent and financial bookmakers were calling indexes in London, Frankfurt and Paris to open 1.6-2 percent weaker as fallout from the U.S. subprime lending woes spread.
The low-yielding yen rallied as investors unwound risky currency carry trades and safe-haven bonds jumped. Yields on benchmark 10-year Japanese government bonds (JGBs) sank to a 2-½ month low as expectations of an interest rate rise from the Bank of Japan this month faded in the market turmoil.
"Central banks are not supposed to be tightening credit when markets are in complete disarray," said John Richards, head of Asia-Pacific Strategy at RBS Securities.
"And this is close to a complete disarray."
The Bank of Japan and the Reserve Bank of Australia followed the European Central Bank and the U.S. Federal Reserve by pumping additional funds into markets amid a global rush to cash and other liquid assets.
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