Fears of a global liquidity crisis gathered pace on Friday, hitting stocks and high-yielding currencies, while Asian central banks joined a global campaign to calm surging short-term borrowing costs.

A fallout from high-risk U.S. subprime mortgages is starting to grip global markets as troubles hit banks, squeeze once ample liquidity and threaten to trigger a seizure in the financial system and damage world growth.

World stocks have shed over seven percent since they hit record highs only a month ago. Investors rushed to buy safe-haven government bonds, unwind yen-financed carry trades and moved to scale back expectations for interest rate hikes by some major central banks this year.

“In principle what we have at the moment is just an all-round sense of panic,” said Marc Ostwald, bond analyst at Insinger de Beaufort in London.

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