SINGAPORE shares opened 7.3 per cent lower on Friday after Wall Street plunged overnight and government data showed the city-state was now in a recession.

At 9.05am, the Straits Times Index (STI) was down 76.2 per cent at 1,971.72, its lowest level since December 2004.

South-east Asia's largest bank DBS Group fell 7.6 per cent while property heavyweight CapitaLand dropped 6 per cent.

Malaysian stocks lost 2.4 per cent.

Singapore's economy shrank at a worse-than expected annualised, seasonally adjusted rate of 6.3 per cent in the third quarter after declining 5.7 per cent in the previous quarter, plunging the economy into a technical recession.

In Tokyo, the Nikkei average tumbled more than 11 per cent 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 anymore and there's no explanation for such a plunge,' said Mr Yoshinori Nagano, chief strategist at Daiwa Asset Management.

'Fears about the US 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 0100GMT (9am Singapore time), the benchmark Nikkei had recovered a little to be down 9.6 per cent or 874.45 points at 8,283.04.

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

The broader Topix lost 7 percent to 841.98.

The Dow Jones industrial average dropped 7.3 per cent 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.