Asian stocks plunged again  Friday, as investors in Japan and South Korea continued to react to the uncertain impact of the US housing-loan crisis. However, the region's banking shares recovered after US financials had staged a late rally Thursday on hopes of a possible cut in the US federal funds rate.

William Poole, President of the St Louis Federal Reserve Bank, had said in an interview  on Thursday that only a “calamity” would justify a Federal Reserve interest rate cut before the meeting. He played down the impact of market turmoil on economic growth, telling Bloomberg News that “no one has called up and said the sky is falling”.

However, in a feed for eager bulls, a spokesperson for the Fed said Poole’s views did not necessarily represent those of the Fed’s interest rate setting committee as a whole.

Japanese stocks today were hit by concerns over a strengthening yen, which reduces the local currency earnings of big exporters. Japan's benchmark Nikkei 225 index fell 874.81 points, or 5.4% to end at 15273.68, the largest point fall since April 17, 2000. It is down 8% since the start of August.

Toyota fell 4.4%, its biggest fall in almost four years. Honda, Japan's second-biggest car maker, fell 5.3%. An unwinding of yen carry trades, which had been prompted by an interest rate as low as 0.5% compared with New Zealand's rate of 8.25%.

South Korea's Kospi, which had fallen 6.9% Thursday, ended 3.2% lower.

Australia's Macquarie Bank, which has been hit by US subprime losses was up 3.7%, leading Asian financial stocks higher.

Australian mortgage lender RAMS Home Loans Group Ltd. jumped 20%. It had lost more than 30% Thursday after failing to refinance A$6.5 billion of loans due to the global liquidity crunch. Despite the plunge in Tokyo, Japan's Mitsubishi UFJ Financial Group Inc. rose 1.8% and Mizuho Financial Group Inc. advanced 2.6%.

Asia Market Indices.

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