SEOUL, SOUTH KOREA - SOUTH Korea's finance minister will plead with US bankers for extended credit lines for the country's banks as fears they might buckle under the strains of the global credit crisis hammered the stock market down as much as 9 per cent.

The central bank joined a global round of rate cuts this week and the country's president has called for a summit with Japan and China as policy makers globally scramble to halt a dangerous downward spiral in financial markets fearing a deep recession for the world economy.

The won swung wildly for a second straight day, slumping as much as 5 per cent in early dealings before paring most of the losses on suspected dollar selling by authorities, which are backed up by the world's sixth biggest currency reserves of US$240 billion (S$355 billion).

The market's in a panic, and it is moving completely out of the norm. Extreme volatilities in forex markets are worsening sentiment'.

'It's critical that some stabilisation is seen in won dollar rates,' said Mr So Jang Ho, an analyst at Samsung Sec.

Finance minister Kang Man Soo is flying to New York where, on the sidelines of annual IMF/World Bank meetings this weekend, he will meet leading US bank executives to seek expanded credit lines for his country's banks.

'(The minister plans to) request their support in domestic banks' efforts to secure more foreign-currency liquidity, such as expanding their credit lines to domestic banks, as well as discuss recent circumstances,' the ministry said.

Mr Kang will meet with Citigroup, Morgan Stanley and Goldman Sachs to seek more liquidity for Korea's banks which are struggling to secure dollar funds.

On Monday, Mr Kang urged the country's banks to sell foreign assets to help raise dollars that other banks are unwilling to lend to them.

He also plans to discuss the global financial crisis, which has toppled banks as far afield as the United States and Iceland, with his counterpart from Japan.

Stocks at 3-year low
Bank shares led the decline on the Seoul stock market, which fell as much as 9 per cent to hit its lowest level since November 2005.

At 0325 GMT (11.35pm Singapore time), it was down 7.75 per cent, in line with steep falls in other markets around the world.

The heads of major local brokerage firms planned an emergency meeting later in the day on the market's slide.

KB Financial Group fell 15 per cent on its trading debut, Shinhan Financial dropped 8.65 per cent and Hana by 8.98 per cent.

The financial stocks subindex is now down 41 per cent on the year. One worry is that Korean banks have high levels of loans compared with deposits - a ratio that is much higher than in most the of the rest of Asia.

That makes them more reliant on short-term credit markets which are at the heart of the global credit crisis.

The concerns set off another rough ride for the won, the worst-performing currency in Asia this year that is monitored daily by Reuters.

The currency has slumped a third this year against the dollar to levels last seen during the Asian financial crisis in 1997/98 when South Korea was driven to the brink of default.

By 0338 GMT, the won was quoted around at 1,390.90 to the dollar, still below Thursday's domestic close of 1,379.5 but above the day's low around 1,453.90.

Currency dealers said authorities were believed to have sold dollars a number of times to try to support the won.

The Bank of Korea rushed to join this week's round of interest rate cuts by authorities around the world, including those in the United States, China and Europe, and signalled it was ready to cut again to help economic growth, which looks set to fall to a six-year low next year.