French banking giant BNP Paribas on Thursday suspended three of its funds exposed to US high-risk property loans, sparking further turmoil in world stock markets.

BNP Paribas Investment Partners, a unit of the French bank, said the funds — Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia — will accept no redemptions or subscriptions until further notice, the bank said.

The announcement sent shares tumbling in Asian markets that were still open when the news broke, as well as in London, Paris and Frankfurt, dealers said.

A Paris-based dealer said the news had shaken the market, reversing opinion on financials which rallied strongly Wednesday thanks to reassuring comments on exposure to the US subprime market, where mortgages are provided to people with poor credit histories.

“Basically, BNP is now saying it’s got major problems with the credit market,” he said.

There are growing jitters about the potential fallout for the world economy from problems in the US subprime lending sector.

BNP’s announcement adds to these fears and follows a similar decision last Friday by the German mutual fund Union Investment which froze one of its funds that has exposure to the US subprime market.

BNP said in a statement it was suspending the calculation of net asset value in the three funds invested in asset-backed securities, due to a “complete evaporation of liquidity in certain segments of the US securitisation market.”