South Korean shares down 4.35pc after morning trading

At 12.04 pm (0304 GMT), the benchmark KOSPI index was down 78.44 points at 1,722.16.

US stocks suffered a brutal sell-off Thursday, fuelled by the Federal Reserve's stark warning about the health of the US economy. The Dow Jones Industrial Average ended the day down 391.01 points or 3.51 percent.

Chinese data suggesting slowing economic momentum and the eurozone debt crisis also weighed on investor sentiment in Seoul.

"The sharp (Seoul) losses seem inevitable following the Fed's downbeat assessment of the US economy, a series of ratings downgrades in the global banking sector and weak economic data in China recently," said Tong Yang Securities analyst Cho Byung-Hyun.

Still, Cho said: "Sharp losses in global financial markets like today will certainly prompt the world's policymakers gathered in Washington to act more boldly".

The won was trading at 1,193.60 just after midday, down 13.80 from Thursday's close which had marked a one-year low for the local unit.

Before the market opened, the finance ministry and central bank said in a joint statement South Korea would take action to respond to any "irregular movement" in the currency market.

They described the recent slump in the won as excessive.

Traders said authorities have been intervening in the forex market for most of the week to support the won by selling the dollar.

Copyright AFP (Agence France-Presse), 2011