Concerns over debt problems in Dubai and an eroding U.S. dollar have sent Asian markets lower. Japanese officials warn government intervention may be on the way to slow the yen's rise. 

Here in South Korea, the KOSPI index tumbled more than four and a half percent Friday.  Most other Asian stock markets were down sharply, a reaction to word that Dubai's main investment arm is having trouble servicing its debt.

State-owned investment company Dubai World, which manages much of the city-state's massive development projects, is asking creditors for a delay in repaying about $60 billion in debt.

Fears of a wider-ranging debt default affecting other banks drove Japan's Nikkei index down two percent.  Hong Kong's Hang Seng fell almost five percent.

Lee Kyoung-su, a market analyst at Taurus Investment and Securities in Seoul, says markets are worried about the possibility of a second financial crisis, like the one that began in the United States last year.

Lee says the Dubai debt crisis is not that large by itself, but may be enough to spark a chain reaction, especially in Europe, where many banks lent money to Dubai.

He says if European banks react to this by getting stricter on making loans, it could have very negative consequences.

The shakiness in world stock markets did not help the dollar, which is at levels against the yen last seen 14 years ago.

Finance Minister Hirohisa Fujii described himself as "extremely nervous" Friday, after the dollar slid toward 84 yen.  He says Tokyo may soon intervene in the markets, to help correct the yen's course. In the past, to halt the dollar's fall, the Bank of Japan has sold yen and bought dollars.

He says the yen's current strength reflects a skewed movement in the market, and adds it would be appropriate for Japan to take action to stabilize global financial markets.

Japan, like many Asian countries, depends heavily on exports for economic growth.  When the dollar gets cheaper, it raises the price of South Korean and Japanese exports like televisions and cars, making them less competitive.

Separately, there were signs Friday Japan is losing its battle against domestic deflation.  Consumer prices there fell for the eighth month, indicating the nation's economic recovery remains fragile.