NEW YORK - GLOBAL stocks dove head first to five-year lows on Friday at the end of a brutal week as even the traditional safe-havens of gold and government bonds suffered as fear-stricken investors sought refuge in cash.

US stock markets recouped a good portion of their losses late in the day, as investors looked to an imminent meeting of Group of Seven finance ministers for a policy response to the deepening global credit crisis.

The dollar rose to a 15-month high against a basket of major currencies as investors scrambled for cash preferably in the world's reserve currency.

The euro capped its worst two-week period against the collar since the introduction of the single currency in 1999.

Oil fell below US$80 (S$118.70) for the first time in a year and gold slid.

'It's total panic. People are so scared that they are looking to liquidate everything that has cash value and to stay away from everything,' said Mr Bruce Dunn, vice president of trading at New Jersey-based Auramet Trading.

In US equities, the Dow Jones slid as much as 8 per cent to break below 8,000 for the first time since April 1, 2003, before paring losses to close down 1.5 per cent.

A late pop in technology shares helped the Nasdaq eke out its first gain of the month on Friday.

The broad S&P index had its worst week ever, while the Dow was down 18 per cent for the week.

'The new lows we've seen in stock markets this week are the result of panic selling,' said Mr Joost van Leenders, asset allocation specialist at Fortis Investments.

The Dow Jones industrial average finished the day down 128.00 points, or 1.49 per cent, at 8,451.19.

The Standard & Poor's 500 Index was down 10.70 points, or 1.18 per cent, at 899.22.

The Nasdaq Composite Index managed to squeak 4.39 points higher to 1,649.51.

Morgan Stanley,the No. 2 independent investment bank, plunged 22.3 per cent on doubts that a planned US$9 billion cash injection from Japan's Mitsubishi UFJ Financial Group would be enough to enable it to ride out the current crisis.

European shares closed out their worst week ever, with the pan-European FTSEuroFirst 300 index shedding 22 per cent for the week after closing down 7.6 per cent.

The FTSEurofirst 300 closed at 851.23 points, its lowest close since July 2, 2003.

The DJ Stoxx European bank index fell 10.6 per cent, with Royal Bank of Scotland down more than 20 per cent while Credit Suisse and Deutsche Bank lost over 16 per cent each.

The MSCI world equity index fell more than 4.0 per cent at one point to a five-year low, losing a fifth of its value this month alone.

The index has lost 43 per cent since January, on track for its worst yearly performance in 20 years.

In US government bonds, only short-term Treasury bills, which are considered pretty much a cash equivalent, were able to catch a bid.

The benchmark 10-year US Treasury note was trading 24/32 lower in price for a yield of 3.88 per cent from 3.78 per cent late on Thursday.

The only buying of debt was on the very short end of the Treasury curve, where one-month T-bill yields were trading all the way down near 0.07 per cent.

'We are not used to seeing stocks implode and Treasuries sell off,' said Mr Josh Stiles, senior bond strategist at IDEAglobal.

'People are saying they don't even want to be in Treasuries now, they need the cash.' The US dollar rose as investors moved out of riskier markets.

Earlier the flight-to-safety sent the yen to a more than six-month high against the US dollar and a three-year peak versus the euro.

The Japanese currency also rose sharply against higher-yielding units such as the Australian and New Zealand dollars, as carry trades were unwound.

'As long as markets remain risk averse to this degree, it is difficult to see the US dollar making a material reversal despite many of the issues currently gripping global markets being home grown,' said Mr Dustin Reid, senior currency strategist at RBS Global Banking & Markets in Chicago.

Tensions persisted in the money market, where the cost of borrowing dollars for three months rose to 4.81875 per cent at the fixing in London.

In foreign exchange, increased risk aversion left the yen as the currency of choice, with the euro earlier falling to a three-year low of 132.80 yen and the dollar hitting a 6-1/2-month low of 97.92 yen.

In New York, the Intercontinental Exchange's US dollar index,which tracks the value of the greenback against a basket of six currencies, was up 1.22 per cent at 82.422, after rising as high as 82.223, the strongest level since June 2007.

The euro fell nearly 1.0 per cent against the dollar at US$1.3468.

Fears about Britain's vulnerability to the financial crisis sent the pound tumbling to a five-year low of US$1.6802.

US crude oil fell slumped 8.9 per cent to settle at US$77.70.

Gold prices slid as the equities rout sparked a sell-off in commodities. Spot gold was down 1.8 per cent at US$870 an ounce on the rally in the dollar and profit-taking.

G7 to the rescue?
Investors are looking to the weekend's meeting of leaders from the Group of Seven major industrial nations. However, hopes for a comprehensive deal to help to solve the crisis were fading fast.

'It is not clear we will see much from the G7 meeting and this will probably keep risk appetite under pressure,' said Mr Rob Minikin, senior currency strategist at Standard Chartered.

Coordinated interest rate cuts by the Federal Reserve and other major central banks this week failed to relieve investor fears that the freeze in credit markets will damage banks further and provoke a deep recession around the world.

'Essentially we're flying blind. No-one has a clue what's going on,' DZ Bank currency strategist Sonja Marten said.

'The uncertainty is too great and volatility is incredible. It's a question of market confidence and somehow we're going to have to get it back.'

Earlier on Friday, Europe and Asia saw panic selling of stocks while oil prices fell to a one-year low as fears grew policymakers are not making enough efforts to contain the financial crisis.

Equity trading in Russia, Iceland, Romania, Ukraine and Indonesia was halted.

Emerging stocks fell nearly 5 per cent to a fresh three-year low. -- REUTERS