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Asia markets tumble as fears spread

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Dow plummets on European debt fears
  • The Nikkei 225 in Tokyo has dropped 760 points since Thursday
  • The Hang Seng in Hong Kong fell below 20,000 for the first time since February
  • The Bank of Japan vowed to pump $20 billion in the market to maintain liquidity

Hong Kong, China (CNN) -- Asia markets opened sharply lower after a wild trading session on Wall Street punctuated by a trading glitch and rising fears the debt crisis in Greece may spread.

The Nikkei has slid more than 760 points since opening Thursday for the first time this week due to a Japanese holiday. Japan's Prime Minister Yukio Hatoyama expressed concern for the market's sudden drop; Japan's central bank on Friday announced it would pump more than $21.6 billion into the markets to keep markets liquid in light of the global turmoil caused by the Greek crisis.

A spokesperson with Japan's central bank said "the aim is to increase a sense of security in the markets by providing ample funds."

Bank of Japan pumps funds into market

The Nikkei-225 index fell more than 4 percent in early trading, although it rebounded slightly to -3.74 percent after the first two-and-a-half hours of trading. The Hang Sang Index in Hong Kong fell below 20,000 for the first time since Feb. 19 in early trading, and the S&P/ASX 200 was down 1.47 percent by early afternoon in Sydney.

Athens mayhem hits Tokyo markets

Yoshito Sengoku, Japan's Minister in Charge of National Policy spoke to reporters Friday morning in Tokyo, saying that the Greece crisis will have a "limited impact on Asian economies."

But Kirby Daley, senior strategist at Newedge Group in Hong Kong, believes that the market reaction to the Greece crisis is not a limited, knee-jerk reaction.

"The drops will not likely be as violent as post-Lehman, but risk aversion is setting in for the long-term, as markets over-celebrated unsustainable stimulus. We may see some relief rallies, but the overall trend should now be firmly down for stocks," said Daley.

The Asian sell-off continues the jitters felt in U.S. markets, punctuated by a 1000-point drop on the Dow Jones Industrial Average that is attributed to a trading glitch.

'Crash of 2.45' paralyzes Wall Street

"On the Dow, we were down 400 to 800 points in five minutes, it was horrifying," Art Hogan, chief market strategist at Jefferies & Co., told CNNMoney.

The Dow ended trading down 348 points; Nasdaq finished down 3.49 percent while the S&P 500 fell 3.24 percent.

A report by Moody's on Thursday warned that banks across Europe face a "common threat" of investor flight from government debt markets, CNNMoney reports

Debt dread comes to European banks

The rating agency said the banking systems in six financially stressed European nations -- Portugal, Italy, Ireland, Greece, Spain and the United Kingdom -- face individual challenges arising from deep recessions, funding shortfalls, and fiscal pullbacks in their home countries.

Don't fear the VIX

The CBOE Volatility (VIX) index, Wall Street's so-called fear gauge, closed at 34.16, its highest finish since May 4, 2009. Earlier, it had spiked as high as 40.71, a 62% jump and its biggest one-day surge since February 2007.

CNN's Kyung Lah and Kevin Voigt, and CNNMoney's Colin Barr and Alexandra Twin contributed to this report