Bourse operator the Korea Exchange will establish the stabilisation fund jointly with the Korea Securities Dealers Association (KSDA) and the Korea Securities Depository, the KSDA said in a statement.

It said the size and timetable of the fund had not yet been decided.

The KSDA also said it will ask the government temporarily to cut the tax on share transactions.

The KOSPI benchmark stock index tumbled 4.13 per cent, or 53.42 points, to close at 1,241.47 Friday, although it pulled back from losses of around nine per cent earlier in the day.

The won closed at 1,309.00 to the dollar, up 70.5 won from Thursday's close. It had fallen to as low as 1,460.00 during the session, the weakest since April 1998.

The currency bounced back in afternoon trading on reports that the government will crack down on speculative forces, and may even intervene in the market.

Rumours that financial regulators will require banks to submit records of daily foreign-exchange transactions also helped the won rally.

Policymakers earlier called for closer international coordination to overcome the global financial crisis.

Prime Minister Han Seung-Soo said at a meeting of top economic officials that the upheaval will spawn a new order in international finance.

'Coordination of international efforts is required to overcome the crisis,' Mr Han was quoted as saying by Yonhap news agency.

'When this financial crisis is over, a new order in international finance will likely emerge,' he said, adding that the global crisis must be overcome by restoring confidence in governments and banks.

Central Bank of Korea governor Lee Seong-Tae told the meeting the country's current account is expected to return to the black in the Sept-Dec period. -- AFP