Singapore share prices fell 2.9 per cent at the end of morning trade Friday on concern that global economic growth will slow as losses tied to U.S. subprime mortgages spread, dealers said.

The Straits Times Index was down 98.80 points at 3,314.37. Declining stocks outpaced rising issues 722 to 104, with 746 stocks unchanged. It is set for a fourth consecutive weekly loss.

Jitters over the US subprime mortgage market overshadowed local news the economy had grown strongly in the second quarter.

"Its all an issue of confidence now," said CIMB-GK research head Song Seng Wun told AFP.

"Yes, the economy did well in the second quarter but that's in the past. This current volatility in the financial markets could potentially impact GDP (gross domestic product) in the final quarter.

"But having said that, the good thing is fundamentals remain strong, and our financial institutions are in a much healthier state than any time before."

Investors dumped shares across the board, with banks leading the decline.

DBS Group fell 90 cents to $20.90 dollars, United Overseas Bank was down 70 cents to $20.50 and Oversea-Chinese Banking Corp shed 20 cents to $.35.

"While nothing has changed fundamentally, sentiment is weak," Mfr Teo Chon Kiat, who helps manage about $8 billion at DBS Asset Management in Singapore, told Bloomberg. "This market has been driven in part by liquidity and with the global credit crunch, there is some nervousness among investors."

United Overseas said on Aug. 7 it has S$392 million ($257.7 million) of investments in CDOs, of which S$91 million are in asset-backed securities. Oversea-Chinese has invested $430 million in CDOs, including $181 million that's linked to asset- backed securities, the bank said on Aug. 6.

The impact of CDOs on banks' earnings will be "limited," Robert Kong, a Singapore-based analyst at Citigroup, said in a report released today. "The real cost in the end will be the re-pricing of equity risk."

AP reports: The realization that weakness in the U.S. housing and credit markets is spreading - and affecting companies and markets abroad - sent Wall Street skidding sharply lower on Thursday.

The Dow Jones industrial average and the Standard & Poor's 500 index on Thursday suffered their biggest one-day plunges since Feb. 27, when subprime mortgage-related jitters were also partially responsible for a sell-off.

This time, investors cashed out of stocks and fled to safer assets such as U.S. Treasury bonds when a French bank said it was freezing three funds that invested in U.S. subprime mortgages. The reason: It was unable to properly value their assets. The announcement rekindled investors' fears that financial institutions will get tighter with their assets, and that companies, investors and individuals will not be able to borrow money.

As hard a fall as stocks took Thursday, the session was just the latest in a string of volatile days on Wall Street. Yet the Dow, bouncing up and down in triple-digit swings on an almost daily basis for the past few weeks, is only 5.2 percent below its record high reached last month, and is still up 6.5 percent for the year.

It does not look like Wall Street will be able to shake its fears about the credit market anytime soon.

A move by the European Central Bank to provide more cash to money markets added to Wall Street's anxiety Thursday. The ECB's loan of more than $130 billion (euro95 billion) to banks at a low rate of 4 percent - its biggest loan ever - was intended to placate the markets, but investors thought it confirmed that the credit markets are in need of a bailout.

Meanwhile, the Federal Reserve added a larger-than-normal $24 billion (euro17.5 billion) in temporary reserves to the U.S. banking system, and the Bank of Japan injected about $8.4 billion (euro6.1 billion) into money markets.

The ECB's injection of money into the system is an unprecedented move and suggests that problems in subprime lending are, in fact, spilling into the general economy, said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.

"This is a mini-panic," he said. "All the things that had been denied up until this point are unraveling. On top of this, retail sales were mediocre, which shows that indeed, the housing collapse is affecting the consumer."

U.S. retailers released July sales figures Thursday that were overall disappointing.

The French bank, BNP Paribas, said one of its units was suspending three funds, worth $3.79 billion (euro2.76 billion) in total, and would not make investor redemptions until it could figure out how much the assets backing them were worth. These funds invest in risky home mortgages through securitization, where banks bundle different types of mortgages together and sell them to institutional investors, who then hope to benefit from homeowners making their mortgage payments.

Because many U.S. homeowners - especially those with poor credit histories, or those who signed up for loans with rates that have recently surged - have not been making their mortgage payments, investing in these types of funds appears to be getting risky.

Defaults, delinquencies and foreclosures don't only affect the housing market, Wall Street is discovering: When lenders suffer losses, they get tighter with their money. And if people are wary about taking on debt, corporate America's dealmaking can slow down, as buyers and sellers haggle over prices.