South Korea today announced sweeping measures to try to rescue its markets dragged down in the global financial crisis, offering a state guarantee on foreign debt and promising to recapitalise financial firms.

Asia's fourth-largest economy has looked as one of the region's most vulnerable to the credit crunch with its banks struggling to find the dollars to pay foreign loans and frightened investors hammering down the won to its lowest in over a decade.

Heads of the country's top three financial authorities told a joint news conference that on top of the guarantees worth $100 billion (€75bn), they would also inject $30 billion (€22bn) to dollar-starved banks and exporters and help smaller firms get some $9 billion (€6.7bn) in loans.

Analysts generally praised the measures, saying they should help soothe investors and boost local markets.

The steps come as countries around the world are scrambling to contain the fallout from a 14-month-old credit crisis and a global economic downturn which threatens to be the most serious slump since the 1930s Great Depression.

The global crisis has dried up dollars available to emerging economies and raised fears about the ability of the heavily leveraged South Korean banks to meet their external debts.

The South Korean won has lost about a third of its value against the dollar so far this year to hit its lowest level since the Asian financial crisis 11 years ago, and foreign investors have sold off a record 30 trillion won of local shares.