TOKYO, Oct 10 (Reuters) – The Nikkei average tumbled more than 11 percent on Friday, leaving it facing its biggest one-day drop since the 1987 stock market crash on fears the financial crisis will lead to a global recession.

While the index later recovered a little, the early stock sell-off led the Osaka Stock Exchange to trigger a circuit-breaker and briefly halt trade in Nikkei futures.

“No one is buying. Fundamentals don’t matter any more and there’s no explanation for such a plunge,” said Yoshinori Nagano, chief strategist at Daiwa Asset Management.

“Fears about the U.S. financial system have been rekindled. The U.S. government is still debating whether it would inject money into financial institutions. It needs to act now even if that would be beyond the current law.”

The U.S. Treasury Department plans to start directly injecting capital in U.S. banks as soon as the end of October in exchange for passive investment stakes, according to a financial policy source familiar with Treasury Secretary Henry Paulson’s thinking. [ID:nN09535775]

As of 0117 GMT, the benchmark Nikkei .N225 was down 8.4 percent or 767.61 points at 8,389.88. At one stage, it hit the lowest point since May 2003.

If the fall is sustained until the end of Friday, it will surpass a 9.4 percent fall in the Nikkei earlier this week, which is the biggest fall since a 14.9 percent one-day slide during the 1987 stock market crash