The dollar rallied against the major European currencies on Friday, benefitting from Wall Street's rebound after blue-chip stocks had plummeted earlier in the trading day.

Traders said losses in Asian asset markets translated to a steep selling of US stocks that weighed on both the dollar and the mark.

But a late rebound in the Dow and some mark/yen profit-taking helped push the dollar/mark to a higher close, they said.

The dollar rose to 129.35/45 yen at the close, up from 128.65/75 at the open and edged higher at 1.7765/75 marks from 1.7725/30.

Traders said the dollar recovered from intervention around 129.50 amid overwhelming scepticism of Japan's efforts to escape its economic malaise.

A two trillion-yen income tax cut announced this week has provided some temporary relief for Japan, but traders said it was unlikely to provide a lasting economic boost.

Wall street prices slide

Earlier in the trading day Wall Street stock prices had plunged.

The Dow Jones Industrial Index tumbled more than 250 points to the day's low of 7576.93, before ending the day off a little over 47 points at 7756.29.

The Tokyo Stock Market dropped 5.2%, Seoul 5.1% and Hong Kong 3.2%.

Analysts said American traders were also concerned about US earnings reports and that sell-offs came as a result of the expiration of quarterly futures.

The losses in America had a knock-on effect in Europe. In London the FTSE100 finished down 148.1 points at 5020.2 - a drop of 2.87%.

The German Xetra Index lost 107.6 points (2.58%) ending at 4055.4.
 

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