BNP Freezes Three Funds Amid Credit Mess

French bank BNP Paribas said Thursday that it is freezing three of its funds because the tightening U.S. credit market has made them impossible to value.

The bank, calling these "exceptional times," said it will halt the calculation of the net asset value of the funds, as well as investor redemptions.

"The complete evaporation of liquidity in certain market segments of the US securitisation market has made it impossible to value certain assets fairly regardless of their quality or credit rating," BNP said in a statement.

The U.S. credit market has seen liquidity dry up as defaults on subprime loans have surged and hit certain lenders.

BNP said the valuation process will resume once liquidity returns to the market.

The funds -- the Parvest Dynamic ABS, the BNP Paribas ABS Euribor and BNP Paribas ABS Eonia -- are worth a total of about 2 billion euros, according to the Associated Press.

The news sent European markets sliding Thursday, and the U.S. stock market was poised to take a hit as well, as fears grew that the subprime crisis could spread globally.

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