ENB: GLOBAL RECESSION(2)
FTSE 100 Risers & Fallers Index Prices (Prices @ 16:30 on 21/01/2008) Company EPIC Price Change Change % Last Close Net Volume 3i Group III 888.50 -12.50 -1.39 901.00 3.91M Admiral Group ADM 943.00 -10.50 -1.10 953.50 1.57M Alliance & Leicester AL. 680.00 -47.00 -6.46 727.00 4.21M AMEC AMEC 665.00 -51.00 -7.12 716.00 5.66M Anglo American AAL 2353.00 -238.00 -9.19 2591.00 13.32M Antofagasta ANTO 578.00 -24.50 -4.07 602.50 10.59M Associated British Foods ABF 806.50 -24.50 -2.95 831.00 4.86M AstraZeneca AZN 2218.00 -127.00 -5.42 2345.00 12.57M Aviva AV. 551.50 -27.50 -4.75 579.00 17.96M BAE SYSTEMS BA. 456.00 -17.25 -3.65 473.25 14.61M Barclays BARC 420.75 -29.25 -6.50 450.00 110.59M BG Group BG. 973.50 -52.50 -5.12 1026.00 15.28M BHP Billiton BLT 1235.00 -143.00 -10.38 1378.00 33.08M BP BP. 519.00 -35.00 -6.32 554.00 94.86M British Airways BAY 279.25 -13.25 -4.53 292.50 19.25M British American Tobacco BATS 1832.00 -59.00 -3.12 1891.00 6.71M British Energy Group BGY 496.50 -35.00 -6.59 531.50 8.91M British Land Co BLND 923.00 -19.50 -2.07 942.50 8.00M British Sky Broadcasting Group BSY 506.00 -17.50 -3.34 523.50 9.46M BT Group BT.A 257.50 -18.25 -6.62 275.75 74.96M Cable and Wireless CW. 159.00 -8.80 -5.24 167.80 23.13M Cadbury Schweppes CBRY 557.00 -21.00 -3.63 578.00 9.72M Cairn Energy CNE 2299.00 -218.00 -8.66 2517.00 1.63M Capita Group (The) CPI 625.00 -26.00 -3.99 651.00 3.70M Carnival CCL 1846.00 -89.00 -4.60 1935.00 2.57M Carphone Warehouse Group (The) CPW 282.00 -20.00 -6.62 302.00 12.60M Centrica CNA 321.75 -14.75 -4.38 336.50 23.59M Compass Group CPG 303.50 -12.75 -4.03 316.25 12.38M Diageo DGE 943.00 -46.50 -4.70 989.50 16.96M Enterprise Inns ETI 384.25 -23.25 -5.71 407.50 8.29M Experian Group EXPN 363.75 -9.00 -2.41 372.75 8.81M FirstGroup FGP 588.50 -41.00 -6.51 629.50 4.01M Friends Provident FP. 158.00 5.50 3.61 152.50 60.71M G4S GFS 211.75 -8.00 -3.64 219.75 9.66M GlaxoSmithKline GSK 1231.00 -59.00 -4.57 1290.00 25.69M Hammerson HMSO 1056.00 2.00 0.19 1054.00 3.91M HBOS HBOS 610.50 -25.50 -4.01 636.00 32.73M Home Retail Group HOME 273.50 -5.75 -2.06 279.25 13.94M HSBC Holdings HSBA 712.00 -48.50 -6.38 760.50 63.30M ICAP IAP 585.00 -31.50 -5.11 616.50 3.69M Imperial Tobacco Group IMT 2398.00 -98.00 -3.93 2496.00 3.24M InterContinental Hotels Group IHG 644.00 -36.50 -5.36 680.50 4.62M International Power IPR 395.00 -20.75 -4.99 415.75 9.64M ITV ITV 70.20 -2.70 -3.70 72.90 32.67M Johnson Matthey JMAT 1720.00 -130.00 -7.03 1850.00 2.54M Kazakhmys KAZ 1041.00 -114.00 -9.87 1155.00 3.85M Kelda Group KEL 1079.00 -2.00 -0.19 1081.00 6.55M Kingfisher KGF 129.70 -0.20 -0.15 129.90 45.59M Land Securities Group LAND 1501.00 -16.00 -1.05 1517.00 4.96M Legal & General Group LGEN 122.00 -4.00 -3.17 126.00 70.14M Liberty International LII 961.00 -44.00 -4.38 1005.00 3.21M Lloyds TSB Group LLOY 373.50 -27.75 -6.92 401.25 63.62M London Stock Exchange Group LSE 1579.00 -71.00 -4.30 1650.00 3.23M Lonmin LMI 3097.00 -157.00 -4.82 3254.00 2.13M Man Group EMG 471.00 -18.25 -3.73 489.25 19.96M Marks & Spencer Group MKS 408.50 -6.00 -1.45 414.50 31.52M Morrison (Wm) Supermarkets MRW 300.50 -14.25 -4.53 314.75 25.05M National Grid NG. 794.00 -43.00 -5.14 837.00 11.62M Next NXT 1300.00 -80.00 -5.80 1380.00 4.89M Old Mutual OML 127.90 -11.80 -8.45 139.70 33.56M Pearson PSON 620.50 -27.50 -4.24 648.00 6.07M Persimmon PSN 759.00 -8.50 -1.11 767.50 7.57M Prudential PRU 573.50 -23.00 -3.86 596.50 32.60M Reckitt Benckiser Group RB. 2535.00 -129.00 -4.84 2664.00 4.08M Reed Elsevier REL 585.50 -23.50 -3.86 609.00 18.51M Rentokil Initial RTO 104.80 -3.60 -3.32 108.40 13.06M Resolution RSL 712.00 0.50 0.07 711.50 16.52M Reuters Group RTR 565.00 -21.00 -3.58 586.00 11.78M REXAM REX 396.00 -10.75 -2.64 406.75 5.18M Rio Tinto RIO 4228.00 -472.00 -10.04 4700.00 11.72M Rolls-Royce Group RR. 448.50 -30.75 -6.42 479.25 18.19M Royal & Sun Alliance Insurance Group RSA 125.00 -5.00 -3.85 130.00 31.73M Royal Bank of Scotland Group (The) RBS 342.75 -30.50 -8.17 373.25 111.54M Royal Dutch Shell RDSB 1775.00 -108.00 -5.74 1883.00 9.12M SABMiller SAB 1103.00 -65.00 -5.57 1168.00 6.90M Sage Group (The) SGE 221.50 -7.00 -3.06 228.50 13.79M Sainsbury (J) SBRY 374.00 -25.50 -6.38 399.50 11.10M Schroders SDR 933.00 -86.00 -8.44 1019.00 2.46M Scottish & Newcastle SCTN 756.00 -9.50 -1.24 765.50 23.66M Scottish & Southern Energy SSE 1464.00 -59.00 -3.87 1523.00 5.98M Severn Trent SVT 1443.00 -50.00 -3.35 1493.00 2.54M Shire SHP 1012.00 -63.00 -5.86 1075.00 6.57M Smith & Nephew SN. 597.50 -19.50 -3.16 617.00 8.29M Smiths Group SMIN 1005.00 -26.00 -2.52 1031.00 2.08M Standard Chartered STAN 1482.00 -117.00 -7.32 1599.00 11.13M Standard Life SL. 203.50 -8.25 -3.90 211.75 11.49M Taylor Wimpey TW. 183.70 2.60 1.44 181.10 20.49M Tesco TSCO 410.50 -14.25 -3.35 424.75 40.31M Thomas Cook Group TCG 220.00 -11.50 -4.97 231.50 4.03M TUI Travel TT. 206.25 -18.75 -8.33 225.00 12.19M Tullow Oil TLW 518.00 -36.00 -6.50 554.00 5.79M Unilever ULVR 1594.00 -118.00 -6.89 1712.00 8.24M United Utilities UU. 701.00 -37.00 -5.01 738.00 9.34M Vedanta Resources VED 1591.00 -141.00 -8.14 1732.00 6.67M Vodafone Group VOD 170.40 -8.10 -4.54 178.50 311.82M Whitbread WTB 1120.00 -31.00 -2.69 1151.00 2.64M Wolseley WOS 689.50 -26.50 -3.70 716.00 25.95M WPP Group WPP 555.50 -26.50 -4.55 582.00 12.24M Xstrata XTA 3179.00 -184.00 -5.47 3363.00 27.95M Yell Group YELL 307.25 -13.00 -4.06 320.25 13.18M
Stock Markets Plunge Worldwide
SLIDESHOW Previous Next Passers-by watch the electronic stock board of a securities firm in Tokyo Monday, Jan. 21, 2007. Japanese stocks plunged Monday morning after Wall Street
declined at the end of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark Nikkei 225 index lost 466.01 points, or
3.36 percent, to 13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) A man walks past the electronic board of a securities firm flashing the closing stock price of morning trading in Tokyo Monday, Jan. 21, 2007. Japanese stocks
plunged Monday morning after Wall Street declined at the end of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark
Nikkei 225 index lost 466.01 points, or 3.36 percent, to 13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi
Kasahara) (Katsumi Kasahara - AP) A passer-by watches the electronic stock board of a securities firm in Tokyo Monday, Jan. 21, 2007. Japanese stocks plunged after Wall Street declined at the end
of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark Nikkei 225 index lost 466.01 points, or 3.36 percent, to
13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) An investor sleeps in a brokerage firm in Hong Kong as the city's benchmark Hang Seng Index drops 1,383.01 points, or 5.49 percent, to 23,818.86 Monday, Jan.
21, 2008. ( AP Photo/Lo Sai Hung ) (Lo Sai Hung - AP) People watch a giant screen showing the Bombay Stock Exchange index on BSE building in Mumbai, India, Monday, Jan 21, 2008. Indian shares plunged Monday
amid a regional market sell-off sparked by worries that the U.S. economy may enter a recession. The country's leading stock index appeared to be headed for its
biggest ever single day loss. (AP Photo/Rajesh Nirgude) (Rajesh Nirgude - AP) A Chinese investor reacts at a private securities company Monday Jan. 21, 2008 in Shanghai, China. Chinese stocks fell Monday, with the benchmark Shanghai
Composite Index dropping more than 5 percent on jitters over the global outlook and upcoming initial public offerings. (AP Photo) (AP) A pedestrian walks past the electronic board of a securities firm flashing Tokyo stock average's plunge in Tokyo Monday, Jan. 21, 2008. The Nikkei 225 index shed
535.35 points, or 3.86 percent, to close at 13,325.94 points on the Tokyo Stock Exchange, tracking declines on Wall Street and around Asia, on worries that the
U.S. economy is recession-bound. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) Pedestrians are reflected on the electronic market board in Tokyo Monday, Jan. 21, 2008. The Nikkei 225 index shed 535.35 points, or 3.86 percent, to close at
13,325.94 points on the Tokyo Stock Exchange, tracking declines on Wall Street and around Asia, on worries that the U.S. economy is recession-bound. (AP
Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) A visitor studies stock prices at the Australian Securities Exchange in Sydney, Australia, Monday, Jan. 21, 2008. The Australian stock market closed lower for the
eleventh session in a row on Monday. At the close the S&P/ASX200 index was down 2.9 per cent to 5,580.4 with the All Ordinaries down 2.91 per cent to
5630.9. (AP Photo/John Pryke) (John Pryke - AP) A visitor adjusts his glasses as he studies stock prices at the Australian Securities Exchange in Sydney, Australia, Monday, Jan. 21, 2008. The Australian stock
market closed lower for the eleventh session in a row on Monday. At the close the S&P/ASX200 index was down 2.9 per cent to 5,580.4 with the All Ordinaries
down 2.91 per cent to 5630.9. (AP Photo/John Pryke) (John Pryke - AP) A man looks at the electronic display board in downtown Hong Kong as the city's benchmark Hang Seng Index drops 1,383.01 points, or 5.49 percent, to
23,818.86 Monday, Jan. 21, 2008.( AP Photo/Lo Sai Hung ) (Lo Sai Hung - AP) People watch a giant screen showing Bombay Stock Exchange index on BSE building in Mumbai, India, Monday, Jan 21, 2008. Indian shares plunged Monday
amid a regional market sell-off sparked by worries that the U.S. economy may enter a recession. The country's leading stock index appeared to be headed for its
biggest ever single day loss. (AP Photo/Rajesh Nirgude) (Rajesh Nirgude - AP) TOOLBOX Resize Text Save/Share + DiggNewsvinedel.icio.usStumble It!RedditFacebookPrint This E-mail This COMMENT washingtonpost.com readers have posted 97 comments about this item.View All Comments »
POST A COMMENTYou must be logged in to leave a comment. Log in Register Why Do I Have to Log In Again?Log In Again? CLOSEWe've made some updates to washingtonpost.com's Groups, MyPost and comment pages. We need you to verify your MyPost ID by
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commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging» Links to this article By Neil Irwin and Zachary GoldfarbWashington Post Staff Writers Monday, January 21, 2008; 3:52 PM
Stock markets around the world plummeted today, as a financial crisis that began in the market for U.S. home mortgages spread to almost all corners of the global
economy.
U.S. markets were closed for the Martin Luther King Jr. holiday, but all of the world's other major economies experienced a sell-off. Stock prices fell 7 percent in
France and Germany, 5 percent in China and Great Britain, and 4 percent in Japan. Stocks lost value in 42 of the 43 nations with widely followed markets; the only
exception was Sri Lanka.
"It was all about blood on the wall," said Georges Ugeux, chairman of Galileo Global Advisors, who was visiting the Indian stock exchange, which fell 7.4 percent
(the equivalent of a 900-point drop in the Dow Jones industrial average). "For them, this is a black Monday."
Behind it all: Investors worldwide grew fearful that problems from massive losses on loans made to U.S. home buyers will cascade through the world financial system.
For example, the Bank of China is now forecast to record a multibillion-dollar loss on U.S. mortgage investments.
And companies that insure bonds are incurring such massive losses on exotic securities based on mortgages that one is in receivership and others have had their credit
ratings cut. That could cause financial institutions worldwide to mark down the value of a wide range of assets guaranteed by these insurance companies.
Add to that the slowing U.S. economy, and it was too much for investors worldwide.
"We're in a global economy," said Randy Bateman, chief investment officer of Huntington Asset Advisors. "This is just the result of a perfect storm of problems that
have surfaced here in the last two weeks that have manifested in the stock markets -- all of them."
While the European stock markets have avoided most of the volatility of the U.S. stock exchanges in recent weeks, European Union officials voiced anxiety today
that the U.S. economic slowdown may begin having a stronger impact on Europe.
"We are all concerned," said Finance Minister Andrej Bajuk of Slovenia, whose country holds the EU's rotating presidency. "We are following the events on a daily
basis. We hope things will not be as bad as they may look."
Other European officials said they hope the strong European economy -- driven by declining unemployment and a strong euro -- will outweigh the emotional response
to the economic slowdown in the United States.
"It seems that the markets are considering the possibility of a more pronounced slowdown, even a recession in the U.S.," EU Monetary Affairs Commissioner Joaqu
¿n Almunia told reporters today. "I hope they will pay attention also to the real information about the economy, in particular in Europe. Because, at least in Europe,
the economic fundamentals of our economies are sound."
Almunia also said that European markets are becoming more independent of the U.S. economy, which he hoped will insulate them from continuing downturns in the
U.S. market. With the dollar at all-time lows against the euro, in the past year European markets increasingly have been turning to China, Russia and oil-wealth Gulf
nations to compensate for some of the business they have lost from the United States.
Champagne producers, for example, are more than making up for lost sales to the United States with increasing markets in Russia and other countries with
burgeoning wealth and a growing consumer class.
Though some European financial institutions with U.S. investments have suffered from the subprime mortgage crisis, most European banks have not been affected.
Mortgage requirements are much more stringent in most European countries, and housing markets, while cooling slightly, have not suffered the decline in sales seen in
the United States.
Even so, consumer confidence has been slipping in many European countries as inflation has begun making a comeback in recent months. Holiday retail sales were
down in France and other countries, in part because consumers fear inflation in the prices of many basic commodities such as milk and bread.
Staff writer Molly Moore in Paris contributed to this report.
Stock Markets Plunge Worldwide
SLIDESHOW Previous Next Passers-by watch the electronic stock board of a securities firm in Tokyo Monday, Jan. 21, 2007. Japanese stocks plunged Monday morning after Wall Street
declined at the end of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark Nikkei 225 index lost 466.01 points, or
3.36 percent, to 13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) A man walks past the electronic board of a securities firm flashing the closing stock price of morning trading in Tokyo Monday, Jan. 21, 2007. Japanese stocks
plunged Monday morning after Wall Street declined at the end of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark
Nikkei 225 index lost 466.01 points, or 3.36 percent, to 13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi
Kasahara) (Katsumi Kasahara - AP) A passer-by watches the electronic stock board of a securities firm in Tokyo Monday, Jan. 21, 2007. Japanese stocks plunged after Wall Street declined at the end
of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark Nikkei 225 index lost 466.01 points, or 3.36 percent, to
13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) An investor sleeps in a brokerage firm in Hong Kong as the city's benchmark Hang Seng Index drops 1,383.01 points, or 5.49 percent, to 23,818.86 Monday, Jan.
21, 2008. ( AP Photo/Lo Sai Hung ) (Lo Sai Hung - AP) People watch a giant screen showing the Bombay Stock Exchange index on BSE building in Mumbai, India, Monday, Jan 21, 2008. Indian shares plunged Monday
amid a regional market sell-off sparked by worries that the U.S. economy may enter a recession. The country's leading stock index appeared to be headed for its
biggest ever single day loss. (AP Photo/Rajesh Nirgude) (Rajesh Nirgude - AP) A Chinese investor reacts at a private securities company Monday Jan. 21, 2008 in Shanghai, China. Chinese stocks fell Monday, with the benchmark Shanghai
Composite Index dropping more than 5 percent on jitters over the global outlook and upcoming initial public offerings. (AP Photo) (AP) A pedestrian walks past the electronic board of a securities firm flashing Tokyo stock average's plunge in Tokyo Monday, Jan. 21, 2008. The Nikkei 225 index shed
535.35 points, or 3.86 percent, to close at 13,325.94 points on the Tokyo Stock Exchange, tracking declines on Wall Street and around Asia, on worries that the
U.S. economy is recession-bound. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) Pedestrians are reflected on the electronic market board in Tokyo Monday, Jan. 21, 2008. The Nikkei 225 index shed 535.35 points, or 3.86 percent, to close at
13,325.94 points on the Tokyo Stock Exchange, tracking declines on Wall Street and around Asia, on worries that the U.S. economy is recession-bound. (AP
Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) A visitor studies stock prices at the Australian Securities Exchange in Sydney, Australia, Monday, Jan. 21, 2008. The Australian stock market closed lower for the
eleventh session in a row on Monday. At the close the S&P/ASX200 index was down 2.9 per cent to 5,580.4 with the All Ordinaries down 2.91 per cent to
5630.9. (AP Photo/John Pryke) (John Pryke - AP) A visitor adjusts his glasses as he studies stock prices at the Australian Securities Exchange in Sydney, Australia, Monday, Jan. 21, 2008. The Australian stock
market closed lower for the eleventh session in a row on Monday. At the close the S&P/ASX200 index was down 2.9 per cent to 5,580.4 with the All Ordinaries
down 2.91 per cent to 5630.9. (AP Photo/John Pryke) (John Pryke - AP) A man looks at the electronic display board in downtown Hong Kong as the city's benchmark Hang Seng Index drops 1,383.01 points, or 5.49 percent, to
23,818.86 Monday, Jan. 21, 2008.( AP Photo/Lo Sai Hung ) (Lo Sai Hung - AP) People watch a giant screen showing Bombay Stock Exchange index on BSE building in Mumbai, India, Monday, Jan 21, 2008. Indian shares plunged Monday
amid a regional market sell-off sparked by worries that the U.S. economy may enter a recession. The country's leading stock index appeared to be headed for its
biggest ever single day loss. (AP Photo/Rajesh Nirgude) (Rajesh Nirgude - AP) TOOLBOX Resize Text Save/Share + DiggNewsvinedel.icio.usStumble It!RedditFacebookPrint This E-mail This COMMENT washingtonpost.com readers have posted 97 comments about this item.View All Comments »
POST A COMMENTYou must be logged in to leave a comment. Log in Register Why Do I Have to Log In Again?Log In Again? CLOSEWe've made some updates to washingtonpost.com's Groups, MyPost and comment pages. We need you to verify your MyPost ID by
logging in before you can post to the new pages. We apologize for the inconvenience.
Discussion PolicyDiscussion Policy CLOSEComments that include profanity or personal attacks or other inappropriate comments or material will be removed from
the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block
users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing
commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging» Links to this article By Neil Irwin and Zachary GoldfarbWashington Post Staff Writers Monday, January 21, 2008; 3:52 PM
Stock markets around the world plummeted today, as a financial crisis that began in the market for U.S. home mortgages spread to almost all corners of the global
economy.
U.S. markets were closed for the Martin Luther King Jr. holiday, but all of the world's other major economies experienced a sell-off. Stock prices fell 7 percent in
France and Germany, 5 percent in China and Great Britain, and 4 percent in Japan. Stocks lost value in 42 of the 43 nations with widely followed markets; the only
exception was Sri Lanka.
"It was all about blood on the wall," said Georges Ugeux, chairman of Galileo Global Advisors, who was visiting the Indian stock exchange, which fell 7.4 percent
(the equivalent of a 900-point drop in the Dow Jones industrial average). "For them, this is a black Monday."
Behind it all: Investors worldwide grew fearful that problems from massive losses on loans made to U.S. home buyers will cascade through the world financial system.
For example, the Bank of China is now forecast to record a multibillion-dollar loss on U.S. mortgage investments.
And companies that insure bonds are incurring such massive losses on exotic securities based on mortgages that one is in receivership and others have had their credit
ratings cut. That could cause financial institutions worldwide to mark down the value of a wide range of assets guaranteed by these insurance companies.
Add to that the slowing U.S. economy, and it was too much for investors worldwide.
"We're in a global economy," said Randy Bateman, chief investment officer of Huntington Asset Advisors. "This is just the result of a perfect storm of problems that
have surfaced here in the last two weeks that have manifested in the stock markets -- all of them."
While the European stock markets have avoided most of the volatility of the U.S. stock exchanges in recent weeks, European Union officials voiced anxiety today
that the U.S. economic slowdown may begin having a stronger impact on Europe.
"We are all concerned," said Finance Minister Andrej Bajuk of Slovenia, whose country holds the EU's rotating presidency. "We are following the events on a daily
basis. We hope things will not be as bad as they may look."
Other European officials said they hope the strong European economy -- driven by declining unemployment and a strong euro -- will outweigh the emotional response
to the economic slowdown in the United States.
"It seems that the markets are considering the possibility of a more pronounced slowdown, even a recession in the U.S.," EU Monetary Affairs Commissioner Joaqu
¿n Almunia told reporters today. "I hope they will pay attention also to the real information about the economy, in particular in Europe. Because, at least in Europe,
the economic fundamentals of our economies are sound."
Almunia also said that European markets are becoming more independent of the U.S. economy, which he hoped will insulate them from continuing downturns in the
U.S. market. With the dollar at all-time lows against the euro, in the past year European markets increasingly have been turning to China, Russia and oil-wealth Gulf
nations to compensate for some of the business they have lost from the United States.
Champagne producers, for example, are more than making up for lost sales to the United States with increasing markets in Russia and other countries with
burgeoning wealth and a growing consumer class.
Though some European financial institutions with U.S. investments have suffered from the subprime mortgage crisis, most European banks have not been affected.
Mortgage requirements are much more stringent in most European countries, and housing markets, while cooling slightly, have not suffered the decline in sales seen in
the United States.
Even so, consumer confidence has been slipping in many European countries as inflation has begun making a comeback in recent months. Holiday retail sales were
down in France and other countries, in part because consumers fear inflation in the prices of many basic commodities such as milk and bread.
Staff writer Molly Moore in Paris contributed to this report.
SLIDESHOW Previous Next Passers-by watch the electronic stock board of a securities firm in Tokyo Monday, Jan. 21, 2007. Japanese stocks plunged Monday morning after Wall Street
declined at the end of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark Nikkei 225 index lost 466.01 points, or
3.36 percent, to 13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) A man walks past the electronic board of a securities firm flashing the closing stock price of morning trading in Tokyo Monday, Jan. 21, 2007. Japanese stocks
plunged Monday morning after Wall Street declined at the end of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark
Nikkei 225 index lost 466.01 points, or 3.36 percent, to 13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi
Kasahara) (Katsumi Kasahara - AP) A passer-by watches the electronic stock board of a securities firm in Tokyo Monday, Jan. 21, 2007. Japanese stocks plunged after Wall Street declined at the end
of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark Nikkei 225 index lost 466.01 points, or 3.36 percent, to
13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) An investor sleeps in a brokerage firm in Hong Kong as the city's benchmark Hang Seng Index drops 1,383.01 points, or 5.49 percent, to 23,818.86 Monday, Jan.
21, 2008. ( AP Photo/Lo Sai Hung ) (Lo Sai Hung - AP) People watch a giant screen showing the Bombay Stock Exchange index on BSE building in Mumbai, India, Monday, Jan 21, 2008. Indian shares plunged Monday
amid a regional market sell-off sparked by worries that the U.S. economy may enter a recession. The country's leading stock index appeared to be headed for its
biggest ever single day loss. (AP Photo/Rajesh Nirgude) (Rajesh Nirgude - AP) A Chinese investor reacts at a private securities company Monday Jan. 21, 2008 in Shanghai, China. Chinese stocks fell Monday, with the benchmark Shanghai
Composite Index dropping more than 5 percent on jitters over the global outlook and upcoming initial public offerings. (AP Photo) (AP) A pedestrian walks past the electronic board of a securities firm flashing Tokyo stock average's plunge in Tokyo Monday, Jan. 21, 2008. The Nikkei 225 index shed
535.35 points, or 3.86 percent, to close at 13,325.94 points on the Tokyo Stock Exchange, tracking declines on Wall Street and around Asia, on worries that the
U.S. economy is recession-bound. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) Pedestrians are reflected on the electronic market board in Tokyo Monday, Jan. 21, 2008. The Nikkei 225 index shed 535.35 points, or 3.86 percent, to close at
13,325.94 points on the Tokyo Stock Exchange, tracking declines on Wall Street and around Asia, on worries that the U.S. economy is recession-bound. (AP
Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) A visitor studies stock prices at the Australian Securities Exchange in Sydney, Australia, Monday, Jan. 21, 2008. The Australian stock market closed lower for the
eleventh session in a row on Monday. At the close the S&P/ASX200 index was down 2.9 per cent to 5,580.4 with the All Ordinaries down 2.91 per cent to
5630.9. (AP Photo/John Pryke) (John Pryke - AP) A visitor adjusts his glasses as he studies stock prices at the Australian Securities Exchange in Sydney, Australia, Monday, Jan. 21, 2008. The Australian stock
market closed lower for the eleventh session in a row on Monday. At the close the S&P/ASX200 index was down 2.9 per cent to 5,580.4 with the All Ordinaries
down 2.91 per cent to 5630.9. (AP Photo/John Pryke) (John Pryke - AP) A man looks at the electronic display board in downtown Hong Kong as the city's benchmark Hang Seng Index drops 1,383.01 points, or 5.49 percent, to
23,818.86 Monday, Jan. 21, 2008.( AP Photo/Lo Sai Hung ) (Lo Sai Hung - AP) People watch a giant screen showing Bombay Stock Exchange index on BSE building in Mumbai, India, Monday, Jan 21, 2008. Indian shares plunged Monday
amid a regional market sell-off sparked by worries that the U.S. economy may enter a recession. The country's leading stock index appeared to be headed for its
biggest ever single day loss. (AP Photo/Rajesh Nirgude) (Rajesh Nirgude - AP) TOOLBOX Resize Text Save/Share + DiggNewsvinedel.icio.usStumble It!RedditFacebookPrint This E-mail This COMMENT washingtonpost.com readers have posted 97 comments about this item.View All Comments »
POST A COMMENTYou must be logged in to leave a comment. Log in Register Why Do I Have to Log In Again?Log In Again? CLOSEWe've made some updates to washingtonpost.com's Groups, MyPost and comment pages. We need you to verify your MyPost ID by
logging in before you can post to the new pages. We apologize for the inconvenience.
Discussion PolicyDiscussion Policy CLOSEComments that include profanity or personal attacks or other inappropriate comments or material will be removed from
the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block
users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing
commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging» Links to this article By Neil Irwin and Zachary GoldfarbWashington Post Staff Writers Monday, January 21, 2008; 3:52 PM
Stock markets around the world plummeted today, as a financial crisis that began in the market for U.S. home mortgages spread to almost all corners of the global
economy.
U.S. markets were closed for the Martin Luther King Jr. holiday, but all of the world's other major economies experienced a sell-off. Stock prices fell 7 percent in
France and Germany, 5 percent in China and Great Britain, and 4 percent in Japan. Stocks lost value in 42 of the 43 nations with widely followed markets; the only
exception was Sri Lanka.
"It was all about blood on the wall," said Georges Ugeux, chairman of Galileo Global Advisors, who was visiting the Indian stock exchange, which fell 7.4 percent
(the equivalent of a 900-point drop in the Dow Jones industrial average). "For them, this is a black Monday."
Behind it all: Investors worldwide grew fearful that problems from massive losses on loans made to U.S. home buyers will cascade through the world financial system.
For example, the Bank of China is now forecast to record a multibillion-dollar loss on U.S. mortgage investments.
And companies that insure bonds are incurring such massive losses on exotic securities based on mortgages that one is in receivership and others have had their credit
ratings cut. That could cause financial institutions worldwide to mark down the value of a wide range of assets guaranteed by these insurance companies.
Add to that the slowing U.S. economy, and it was too much for investors worldwide.
"We're in a global economy," said Randy Bateman, chief investment officer of Huntington Asset Advisors. "This is just the result of a perfect storm of problems that
have surfaced here in the last two weeks that have manifested in the stock markets -- all of them."
While the European stock markets have avoided most of the volatility of the U.S. stock exchanges in recent weeks, European Union officials voiced anxiety today
that the U.S. economic slowdown may begin having a stronger impact on Europe.
"We are all concerned," said Finance Minister Andrej Bajuk of Slovenia, whose country holds the EU's rotating presidency. "We are following the events on a daily
basis. We hope things will not be as bad as they may look."
Other European officials said they hope the strong European economy -- driven by declining unemployment and a strong euro -- will outweigh the emotional response
to the economic slowdown in the United States.
"It seems that the markets are considering the possibility of a more pronounced slowdown, even a recession in the U.S.," EU Monetary Affairs Commissioner Joaqu
¿n Almunia told reporters today. "I hope they will pay attention also to the real information about the economy, in particular in Europe. Because, at least in Europe,
the economic fundamentals of our economies are sound."
Almunia also said that European markets are becoming more independent of the U.S. economy, which he hoped will insulate them from continuing downturns in the
U.S. market. With the dollar at all-time lows against the euro, in the past year European markets increasingly have been turning to China, Russia and oil-wealth Gulf
nations to compensate for some of the business they have lost from the United States.
Champagne producers, for example, are more than making up for lost sales to the United States with increasing markets in Russia and other countries with
burgeoning wealth and a growing consumer class.
Though some European financial institutions with U.S. investments have suffered from the subprime mortgage crisis, most European banks have not been affected.
Mortgage requirements are much more stringent in most European countries, and housing markets, while cooling slightly, have not suffered the decline in sales seen in
the United States.
Even so, consumer confidence has been slipping in many European countries as inflation has begun making a comeback in recent months. Holiday retail sales were
down in France and other countries, in part because consumers fear inflation in the prices of many basic commodities such as milk and bread.
Staff writer Molly Moore in Paris contributed to this report.
Stock Markets Plunge Worldwide
SLIDESHOW Previous Next Passers-by watch the electronic stock board of a securities firm in Tokyo Monday, Jan. 21, 2007. Japanese stocks plunged Monday morning after Wall Street
declined at the end of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark Nikkei 225 index lost 466.01 points, or
3.36 percent, to 13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) A man walks past the electronic board of a securities firm flashing the closing stock price of morning trading in Tokyo Monday, Jan. 21, 2007. Japanese stocks
plunged Monday morning after Wall Street declined at the end of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark
Nikkei 225 index lost 466.01 points, or 3.36 percent, to 13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi
Kasahara) (Katsumi Kasahara - AP) A passer-by watches the electronic stock board of a securities firm in Tokyo Monday, Jan. 21, 2007. Japanese stocks plunged after Wall Street declined at the end
of last week amid pessimism over the U.S. government's plans to forestall recession. The benchmark Nikkei 225 index lost 466.01 points, or 3.36 percent, to
13,395.28 points by the end of the morning session on the Tokyo Stock Exchange. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) An investor sleeps in a brokerage firm in Hong Kong as the city's benchmark Hang Seng Index drops 1,383.01 points, or 5.49 percent, to 23,818.86 Monday, Jan.
21, 2008. ( AP Photo/Lo Sai Hung ) (Lo Sai Hung - AP) People watch a giant screen showing the Bombay Stock Exchange index on BSE building in Mumbai, India, Monday, Jan 21, 2008. Indian shares plunged Monday
amid a regional market sell-off sparked by worries that the U.S. economy may enter a recession. The country's leading stock index appeared to be headed for its
biggest ever single day loss. (AP Photo/Rajesh Nirgude) (Rajesh Nirgude - AP) A Chinese investor reacts at a private securities company Monday Jan. 21, 2008 in Shanghai, China. Chinese stocks fell Monday, with the benchmark Shanghai
Composite Index dropping more than 5 percent on jitters over the global outlook and upcoming initial public offerings. (AP Photo) (AP) A pedestrian walks past the electronic board of a securities firm flashing Tokyo stock average's plunge in Tokyo Monday, Jan. 21, 2008. The Nikkei 225 index shed
535.35 points, or 3.86 percent, to close at 13,325.94 points on the Tokyo Stock Exchange, tracking declines on Wall Street and around Asia, on worries that the
U.S. economy is recession-bound. (AP Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) Pedestrians are reflected on the electronic market board in Tokyo Monday, Jan. 21, 2008. The Nikkei 225 index shed 535.35 points, or 3.86 percent, to close at
13,325.94 points on the Tokyo Stock Exchange, tracking declines on Wall Street and around Asia, on worries that the U.S. economy is recession-bound. (AP
Photo/Katsumi Kasahara) (Katsumi Kasahara - AP) A visitor studies stock prices at the Australian Securities Exchange in Sydney, Australia, Monday, Jan. 21, 2008. The Australian stock market closed lower for the
eleventh session in a row on Monday. At the close the S&P/ASX200 index was down 2.9 per cent to 5,580.4 with the All Ordinaries down 2.91 per cent to
5630.9. (AP Photo/John Pryke) (John Pryke - AP) A visitor adjusts his glasses as he studies stock prices at the Australian Securities Exchange in Sydney, Australia, Monday, Jan. 21, 2008. The Australian stock
market closed lower for the eleventh session in a row on Monday. At the close the S&P/ASX200 index was down 2.9 per cent to 5,580.4 with the All Ordinaries
down 2.91 per cent to 5630.9. (AP Photo/John Pryke) (John Pryke - AP) A man looks at the electronic display board in downtown Hong Kong as the city's benchmark Hang Seng Index drops 1,383.01 points, or 5.49 percent, to
23,818.86 Monday, Jan. 21, 2008.( AP Photo/Lo Sai Hung ) (Lo Sai Hung - AP) People watch a giant screen showing Bombay Stock Exchange index on BSE building in Mumbai, India, Monday, Jan 21, 2008. Indian shares plunged Monday
amid a regional market sell-off sparked by worries that the U.S. economy may enter a recession. The country's leading stock index appeared to be headed for its
biggest ever single day loss. (AP Photo/Rajesh Nirgude) (Rajesh Nirgude - AP) TOOLBOX Resize Text Save/Share + DiggNewsvinedel.icio.usStumble It!RedditFacebookPrint This E-mail This COMMENT washingtonpost.com readers have posted 97 comments about this item.View All Comments »
POST A COMMENTYou must be logged in to leave a comment. Log in Register Why Do I Have to Log In Again?Log In Again? CLOSEWe've made some updates to washingtonpost.com's Groups, MyPost and comment pages. We need you to verify your MyPost ID by
logging in before you can post to the new pages. We apologize for the inconvenience.
Discussion PolicyDiscussion Policy CLOSEComments that include profanity or personal attacks or other inappropriate comments or material will be removed from
the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block
users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing
commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging» Links to this article By Neil Irwin and Zachary GoldfarbWashington Post Staff Writers Monday, January 21, 2008; 3:52 PM
Stock markets around the world plummeted today, as a financial crisis that began in the market for U.S. home mortgages spread to almost all corners of the global
economy.
U.S. markets were closed for the Martin Luther King Jr. holiday, but all of the world's other major economies experienced a sell-off. Stock prices fell 7 percent in
France and Germany, 5 percent in China and Great Britain, and 4 percent in Japan. Stocks lost value in 42 of the 43 nations with widely followed markets; the only
exception was Sri Lanka.
"It was all about blood on the wall," said Georges Ugeux, chairman of Galileo Global Advisors, who was visiting the Indian stock exchange, which fell 7.4 percent
(the equivalent of a 900-point drop in the Dow Jones industrial average). "For them, this is a black Monday."
Behind it all: Investors worldwide grew fearful that problems from massive losses on loans made to U.S. home buyers will cascade through the world financial system.
For example, the Bank of China is now forecast to record a multibillion-dollar loss on U.S. mortgage investments.
And companies that insure bonds are incurring such massive losses on exotic securities based on mortgages that one is in receivership and others have had their credit
ratings cut. That could cause financial institutions worldwide to mark down the value of a wide range of assets guaranteed by these insurance companies.
Add to that the slowing U.S. economy, and it was too much for investors worldwide.
"We're in a global economy," said Randy Bateman, chief investment officer of Huntington Asset Advisors. "This is just the result of a perfect storm of problems that
have surfaced here in the last two weeks that have manifested in the stock markets -- all of them."
While the European stock markets have avoided most of the volatility of the U.S. stock exchanges in recent weeks, European Union officials voiced anxiety today
that the U.S. economic slowdown may begin having a stronger impact on Europe.
"We are all concerned," said Finance Minister Andrej Bajuk of Slovenia, whose country holds the EU's rotating presidency. "We are following the events on a daily
basis. We hope things will not be as bad as they may look."
Other European officials said they hope the strong European economy -- driven by declining unemployment and a strong euro -- will outweigh the emotional response
to the economic slowdown in the United States.
"It seems that the markets are considering the possibility of a more pronounced slowdown, even a recession in the U.S.," EU Monetary Affairs Commissioner Joaqu
¿n Almunia told reporters today. "I hope they will pay attention also to the real information about the economy, in particular in Europe. Because, at least in Europe,
the economic fundamentals of our economies are sound."
Almunia also said that European markets are becoming more independent of the U.S. economy, which he hoped will insulate them from continuing downturns in the
U.S. market. With the dollar at all-time lows against the euro, in the past year European markets increasingly have been turning to China, Russia and oil-wealth Gulf
nations to compensate for some of the business they have lost from the United States.
Champagne producers, for example, are more than making up for lost sales to the United States with increasing markets in Russia and other countries with
burgeoning wealth and a growing consumer class.
Though some European financial institutions with U.S. investments have suffered from the subprime mortgage crisis, most European banks have not been affected.
Mortgage requirements are much more stringent in most European countries, and housing markets, while cooling slightly, have not suffered the decline in sales seen in
the United States.
Even so, consumer confidence has been slipping in many European countries as inflation has begun making a comeback in recent months. Holiday retail sales were
down in France and other countries, in part because consumers fear inflation in the prices of many basic commodities such as milk and bread.
Staff writer Molly Moore in Paris contributed to this report.
Fear routs world stocks; French, German indexes fall 7%
A dealer reacts to Monday's market action in front of a display that shows the drop in Germany's DAX stock index. Digg del.icio.us Newsvine Reddit FacebookWhat's this?By Jeffrey Stinson, USA TODAYLONDON — Stock markets across Europe and Asia plunged Monday on fears that President Bush's emergency economic stimulus plan won't ward off recession in
the USA.At one point during the day, stock indexes in London, Germany and France faced their biggest drops since the Sept. 11, 2001 terror attacks on the World Trade
Center in New York.
Monday's sell-off, which started in Asia and spread to Europe, followed the worst week for U.S. stock markets in five years, as investors registered their forecast for
the world's biggest economy.
U.S. financial markets were closed Monday for the Martin Luther King Jr. holiday, but U.S. stock index futures were down sharply, suggesting investors don't have
much hope of Wall Street leading a rebound when it returns to business Tuesday.
"I think people were underwhelmed by the (U.S. stimulus) package," said Tim Bond, head of asset allocations globally for Barclays Capital in London.
FIND MORE STORIES IN: Wall Street Standard Asia Asian US economy Dow Nasdaq composite Stock markets Bush and Congress have yet to work out details, but the size of the $140 billion plan, although larger than some expected, wasn't enough to convince investors that
economic conditions in the USA would not deepen and spread around the globe.
Dominique Strauss-Kahn, the head of the International Monetary Fund, called the global economic situation "serious" on Monday, adding "all the countries in the
world are suffering from a slowdown in growth in the Unites States."
Bond said Monday's drop in stock prices represented an accumulation of bad economic news that began in June with the subprime mortgage lending crisis. That has
led to tighter credit globally and billions in losses at major banks.
The latest write-downs and losses announced in the past two weeks may have pushed investors over the edge, Bond said.
"What investors have been doing is hoping against hope," he said. "And if you were hoping against hope we could get through this, this was the last straw."
Jan Randolph, who heads sovereign risk for the analyst firm Global Insight in London, agreed.
"It's just a realization that the economic outlook is getting darker," Randolph said. "It is going to be a lot more gloomy than realized."
He said Global Insight has increased its assessment of the likelihood that the U.S. economy will slide into recession to a 50% chance.
The U.K. benchmark FTSE-100 dropped 5.5% Monday to 5578.20; France's CAC-40 Index plunged 6.8% to 4744.15, while Germany's blue-chip DAX 30
slumped 7.2% to 6790.19.
The losses on the blue-chip stock indexes of Germany, Britain and France alone amounted to more than $350 billion, or roughly the size of the combined economies
of New Zealand, Hungary and Singapore.
The Toronto Stock Exchange's main index fell for a fifth straight session on Monday, diving more than 4% in its biggest intraday drop in seven years, amid concern
about the health of the U.S. economy.
The S&P/TSX composite index was down 520.10 points, or 4.1%, at 12,217.02 in afternoon trading, after earlier falling as much as 617 points.
It was the biggest intraday decline since Feb. 16, 2001. Since last Tuesday, the index has lost more than 1,400 points, erasing all of 2007's gains. On Monday, the
index revisited territory last seen in November 2006.
Stock markets have been in full retreat this year over the economic fears. Many indexes are more than 20% below their recent cycle peaks, a traditional sign that
what is going on is not just a correction but the start of a bear market.
The broad U.S. Standard & Poor's 500 index had its biggest weekly fall since July 2002 last week and is down 15.3% from its peak close on Oct. 9.
The Dow Jones industrial average is off 8.8% for the year. The S&P 500 index is down just under 10%, and the Nasdaq composite has fallen 11.8% in 2008.
If U.S. stocks open on Tuesday at the levels futures are indicating, it would push the market dangerously close to bear market territory — or a 20% drop from their
peak in October. That would mark the end of the bull market that began in early October 2002.
"We're going for some tough slugging here," said Paul Nolte, director of investments at Hinsdale Associates in Hinsdale, Ill.
Dow Jones industrial average futures dropped 546 points or 4.5%. Should the Dow close lower on Tuesday by the amount the futures suggest, it would rank as the
fourth-largest point loss ever for the index.
S&P 500 futures were down 62.5 points, or a 4.7% drop, far below fair value, a mathematical formula that evaluates pricing by taking into account interest rates,
dividends and time to expiration on the contract. Nasdaq 100 futures slid 77.5 points, or 4.2%.
One major stock index, the Russell 2000 index of small-cap stocks, fell into bear market territory last week.
Since the start of the year, Japan's Nikkei index has declined 13%, while Hong Kong's blue-chip index is down more than 14%. Even China's Shanghai index —
which nearly doubled last year — has fallen 6.6% since the beginning of the year and nearly 20% from its all-time closing high on Oct. 16.
"We've taken our lead from the Asian markets who have not been impressed by the U.S. There's debate if there's going to be a recession in the U.S. I don't think
there's much chance of that though," said Richard Hunter an analyst at Hargreaves Lansdown Stockbrokers in London.
Concerns about the outlook for the U.S. economy, a major export market for Asian companies, has sent the region's markets sliding in 2008. Just last Wednesday,
Hong Kong's blue-chip Hang Seng index sank 5.4%.
"It's another horrible day," said Francis Lun, a general manager at Fulbright Securities in Hong Kong. "Today it's because of disappointment that the U.S. stimulus
(package) is too little, too late and investors feel it won't help the economy recover."
Japan's benchmark Nikkei 225 index slid 3.9% Monday to 13,325.94 points, its lowest close in more than 2 years. China's Shanghai Composite index plunged
5.1%.
India's benchmark stock index tumbled 7.4%, while Hong Kong's Hang Seng index plummeted 5.5%, its biggest percentage drop since the Sept. 11, 2001, terror
attacks.
"People are certainly nervous about a potential recession in the U.S. spilling over to the rest of the world," said David Cohen, Director of Asian Economic
Forecasting at Action Economics in Singapore.
"Maybe there's still some wariness about politicians are able to come up with a compromise and act sufficiently quickly" on a stimulus package, Cohen said. "I think
the impact would be marginal anyway."
Investors took cues from the negative reaction to the president's plan on Wall Street on Friday, when the Dow Jones industrial average slid 0.5% to 12,099.30,
bringing its loss for the year so far to nearly 9%.
Traders also have shrugged off assurances from Federal Reserve Chairman Ben Bernanke that the U.S. central bank is ready to act aggressively — which means a
likely big interest rate cut later this month — to help the sagging economy.
Some analysts predict that Asia won't suffer dramatically from a possible U.S. recession because increased trade and investment within Asia has made the region less
reliant on the United States than in the past. Excluding Japan, 43% of Asia's exports go to other nations in the region, Lehman Bros. calculates, up from 37% in 1995.
But on Monday, uncertainty and pessimism reigned.
In Tokyo trading, exporters got hit hard, partly because of the yen's recent strength against the dollar. Toyota Motor (TM) lost 3.3% and Honda Motor (HMC) sank
3.4%.
In Hong Kong, Bank of China (BACHF) dropped 6.4% and China Construction Bank (CICHF) slid 7.8%.
India's benchmark Sensex index fell 1,353 points, or 7.4% — its second-biggest percentage drop ever — to 17,605.35. At one point, it was down nearly 11%.
The decline hit companies across the board, with power utility Reliance Energy (RELFF) falling 16.4%. Major software company Tata Consultancy Services slid
7.6%.
"A gloomy U.S. climate has affected the global markets. Even if those markets recover, it will take sometime for the recovery to reach India because today's fall has
been so drastic," said Jayant Pai, of the Mumbai investment company IL&FS.
Pai and others suggested that the declines could lead to a buying opportunity.
"The sell-off today takes us close to the bottom," she said.
But leading investment bank Morgan Stanley said Monday that was not the case now, at least as far as Europe was concerned.
"We are not compelled to buy yet despite bearish sentiment," its European equity strategy team said in a note. "We continue to prefer cash over equities."
Recent polls show institutional investors with large cash holdings, a sign of deep concern about the future direction of assets.
Contributing: Reuters, Associated Press
the USA.At one point during the day, stock indexes in London, Germany and France faced their biggest drops since the Sept. 11, 2001 terror attacks on the World Trade
Center in New York.
Monday's sell-off, which started in Asia and spread to Europe, followed the worst week for U.S. stock markets in five years, as investors registered their forecast for
the world's biggest economy.
U.S. financial markets were closed Monday for the Martin Luther King Jr. holiday, but U.S. stock index futures were down sharply, suggesting investors don't have
much hope of Wall Street leading a rebound when it returns to business Tuesday.
"I think people were underwhelmed by the (U.S. stimulus) package," said Tim Bond, head of asset allocations globally for Barclays Capital in London.
FIND MORE STORIES IN: Wall Street Standard Asia Asian US economy Dow Nasdaq composite Stock markets Bush and Congress have yet to work out details, but the size of the $140 billion plan, although larger than some expected, wasn't enough to convince investors that
economic conditions in the USA would not deepen and spread around the globe.
Dominique Strauss-Kahn, the head of the International Monetary Fund, called the global economic situation "serious" on Monday, adding "all the countries in the
world are suffering from a slowdown in growth in the Unites States."
Bond said Monday's drop in stock prices represented an accumulation of bad economic news that began in June with the subprime mortgage lending crisis. That has
led to tighter credit globally and billions in losses at major banks.
The latest write-downs and losses announced in the past two weeks may have pushed investors over the edge, Bond said.
"What investors have been doing is hoping against hope," he said. "And if you were hoping against hope we could get through this, this was the last straw."
Jan Randolph, who heads sovereign risk for the analyst firm Global Insight in London, agreed.
"It's just a realization that the economic outlook is getting darker," Randolph said. "It is going to be a lot more gloomy than realized."
He said Global Insight has increased its assessment of the likelihood that the U.S. economy will slide into recession to a 50% chance.
The U.K. benchmark FTSE-100 dropped 5.5% Monday to 5578.20; France's CAC-40 Index plunged 6.8% to 4744.15, while Germany's blue-chip DAX 30
slumped 7.2% to 6790.19.
The losses on the blue-chip stock indexes of Germany, Britain and France alone amounted to more than $350 billion, or roughly the size of the combined economies
of New Zealand, Hungary and Singapore.
The Toronto Stock Exchange's main index fell for a fifth straight session on Monday, diving more than 4% in its biggest intraday drop in seven years, amid concern
about the health of the U.S. economy.
The S&P/TSX composite index was down 520.10 points, or 4.1%, at 12,217.02 in afternoon trading, after earlier falling as much as 617 points.
It was the biggest intraday decline since Feb. 16, 2001. Since last Tuesday, the index has lost more than 1,400 points, erasing all of 2007's gains. On Monday, the
index revisited territory last seen in November 2006.
Stock markets have been in full retreat this year over the economic fears. Many indexes are more than 20% below their recent cycle peaks, a traditional sign that
what is going on is not just a correction but the start of a bear market.
The broad U.S. Standard & Poor's 500 index had its biggest weekly fall since July 2002 last week and is down 15.3% from its peak close on Oct. 9.
The Dow Jones industrial average is off 8.8% for the year. The S&P 500 index is down just under 10%, and the Nasdaq composite has fallen 11.8% in 2008.
If U.S. stocks open on Tuesday at the levels futures are indicating, it would push the market dangerously close to bear market territory — or a 20% drop from their
peak in October. That would mark the end of the bull market that began in early October 2002.
"We're going for some tough slugging here," said Paul Nolte, director of investments at Hinsdale Associates in Hinsdale, Ill.
Dow Jones industrial average futures dropped 546 points or 4.5%. Should the Dow close lower on Tuesday by the amount the futures suggest, it would rank as the
fourth-largest point loss ever for the index.
S&P 500 futures were down 62.5 points, or a 4.7% drop, far below fair value, a mathematical formula that evaluates pricing by taking into account interest rates,
dividends and time to expiration on the contract. Nasdaq 100 futures slid 77.5 points, or 4.2%.
One major stock index, the Russell 2000 index of small-cap stocks, fell into bear market territory last week.
Since the start of the year, Japan's Nikkei index has declined 13%, while Hong Kong's blue-chip index is down more than 14%. Even China's Shanghai index —
which nearly doubled last year — has fallen 6.6% since the beginning of the year and nearly 20% from its all-time closing high on Oct. 16.
"We've taken our lead from the Asian markets who have not been impressed by the U.S. There's debate if there's going to be a recession in the U.S. I don't think
there's much chance of that though," said Richard Hunter an analyst at Hargreaves Lansdown Stockbrokers in London.
Concerns about the outlook for the U.S. economy, a major export market for Asian companies, has sent the region's markets sliding in 2008. Just last Wednesday,
Hong Kong's blue-chip Hang Seng index sank 5.4%.
"It's another horrible day," said Francis Lun, a general manager at Fulbright Securities in Hong Kong. "Today it's because of disappointment that the U.S. stimulus
(package) is too little, too late and investors feel it won't help the economy recover."
Japan's benchmark Nikkei 225 index slid 3.9% Monday to 13,325.94 points, its lowest close in more than 2 years. China's Shanghai Composite index plunged
5.1%.
India's benchmark stock index tumbled 7.4%, while Hong Kong's Hang Seng index plummeted 5.5%, its biggest percentage drop since the Sept. 11, 2001, terror
attacks.
"People are certainly nervous about a potential recession in the U.S. spilling over to the rest of the world," said David Cohen, Director of Asian Economic
Forecasting at Action Economics in Singapore.
"Maybe there's still some wariness about politicians are able to come up with a compromise and act sufficiently quickly" on a stimulus package, Cohen said. "I think
the impact would be marginal anyway."
Investors took cues from the negative reaction to the president's plan on Wall Street on Friday, when the Dow Jones industrial average slid 0.5% to 12,099.30,
bringing its loss for the year so far to nearly 9%.
Traders also have shrugged off assurances from Federal Reserve Chairman Ben Bernanke that the U.S. central bank is ready to act aggressively — which means a
likely big interest rate cut later this month — to help the sagging economy.
Some analysts predict that Asia won't suffer dramatically from a possible U.S. recession because increased trade and investment within Asia has made the region less
reliant on the United States than in the past. Excluding Japan, 43% of Asia's exports go to other nations in the region, Lehman Bros. calculates, up from 37% in 1995.
But on Monday, uncertainty and pessimism reigned.
In Tokyo trading, exporters got hit hard, partly because of the yen's recent strength against the dollar. Toyota Motor (TM) lost 3.3% and Honda Motor (HMC) sank
3.4%.
In Hong Kong, Bank of China (BACHF) dropped 6.4% and China Construction Bank (CICHF) slid 7.8%.
India's benchmark Sensex index fell 1,353 points, or 7.4% — its second-biggest percentage drop ever — to 17,605.35. At one point, it was down nearly 11%.
The decline hit companies across the board, with power utility Reliance Energy (RELFF) falling 16.4%. Major software company Tata Consultancy Services slid
7.6%.
"A gloomy U.S. climate has affected the global markets. Even if those markets recover, it will take sometime for the recovery to reach India because today's fall has
been so drastic," said Jayant Pai, of the Mumbai investment company IL&FS.
Pai and others suggested that the declines could lead to a buying opportunity.
"The sell-off today takes us close to the bottom," she said.
But leading investment bank Morgan Stanley said Monday that was not the case now, at least as far as Europe was concerned.
"We are not compelled to buy yet despite bearish sentiment," its European equity strategy team said in a note. "We continue to prefer cash over equities."
Recent polls show institutional investors with large cash holdings, a sign of deep concern about the future direction of assets.
Contributing: Reuters, Associated Press
FTSE sheds 100 points at open By Michael HunterMon Jan 21, 4:10 AM ET
The FTSE 100 fell more than 100 points in the opening session of the week, pressured by a combination of renewed concern about the health of the US economy
and fading bid talk in the mining sector.
The blue-chip fell to 2 per cent to 5,785.0, extending its run of consecutive negative sessions to five and intensifying its worst start to a year since its launch in 1983.
The index has now lost nearly 10 per cent since the start of the year.
The losses in London follow heavy falls in Asia as investors gave President Bush's stimulus package an underwhelming response. In Japan, the benchmark Nikkei
225 slumped 3.4 per cent to a 27-month low of 13,395.28 by the end of morning trading. The index has lost a quarter of its value in the past six months.
Hong Kong's Hang Seng declined 2.4 per cent to 24,606.36, while Australian stocks extended their losing streak to 11straight sessions. South Korea's Kospi and
the Singapore benchmark index were also lower.
Stock markets may struggle for direction later in the session because US markets are closed for a national holiday.
In London, every single stock on the senior index, bar two at the centre of confirmed bid activity, fell in morning trade.
Miners suffered the heaviest falls, as investors turned their backs on the bid rumour that helped the heavily-weighted sector provide some protection from the bearish
conditions. As talk of an improved offer from BHP Billiton (NYSE:BHP) for Rio Tinto lost its lustre. Rio lost 6.2 per cent to £43.96 and BHP fell 6.7 per cent to
£12.84.
There were also losses in the wider resources sector. Vedanta Resources lost 9 per cent to £15.75, Xstrata fell 5.5 per cent to £31.80 and Antofagasta was 4.7 per
cent at 574½p.
Financial stocks were hit by worries that monoline insurers, which guarantee complex debt products from the risk of default could suffer as the wider repercussions of
the credit crisis unwind.
London-listed insurers fell across the board. Old Mutual lost 5.1 per cent to 132.6p, Standard Life fell 4.5 per cent to 202p, Prudential lost 4.1 per cent to 573p and
Aviva was 4 per cent weaker at 556p. But Friends Provident rose 1.8p or 1.2 per cent to 154.3p after reports that JC Flowers, the US hedge fund, was considering
a bid for the struggling insurer.
Wolseley (NYSE:WOS) was the single biggest faller on the FTSE 100. The supplier of plumbing and heating goods directly exposed to the troubled US housing
market said trading profit fell 25 per cent and market conditions looked set to worsen.
Lower down the market, Northern Rock rebounded 55 per cent to 100p after the government backed a proposal to convert the stricken bank's public loans of more
than £25bn into bonds in a move that made a private sale of the company more likely.
and fading bid talk in the mining sector.
The blue-chip fell to 2 per cent to 5,785.0, extending its run of consecutive negative sessions to five and intensifying its worst start to a year since its launch in 1983.
The index has now lost nearly 10 per cent since the start of the year.
The losses in London follow heavy falls in Asia as investors gave President Bush's stimulus package an underwhelming response. In Japan, the benchmark Nikkei
225 slumped 3.4 per cent to a 27-month low of 13,395.28 by the end of morning trading. The index has lost a quarter of its value in the past six months.
Hong Kong's Hang Seng declined 2.4 per cent to 24,606.36, while Australian stocks extended their losing streak to 11straight sessions. South Korea's Kospi and
the Singapore benchmark index were also lower.
Stock markets may struggle for direction later in the session because US markets are closed for a national holiday.
In London, every single stock on the senior index, bar two at the centre of confirmed bid activity, fell in morning trade.
Miners suffered the heaviest falls, as investors turned their backs on the bid rumour that helped the heavily-weighted sector provide some protection from the bearish
conditions. As talk of an improved offer from BHP Billiton (NYSE:BHP) for Rio Tinto lost its lustre. Rio lost 6.2 per cent to £43.96 and BHP fell 6.7 per cent to
£12.84.
There were also losses in the wider resources sector. Vedanta Resources lost 9 per cent to £15.75, Xstrata fell 5.5 per cent to £31.80 and Antofagasta was 4.7 per
cent at 574½p.
Financial stocks were hit by worries that monoline insurers, which guarantee complex debt products from the risk of default could suffer as the wider repercussions of
the credit crisis unwind.
London-listed insurers fell across the board. Old Mutual lost 5.1 per cent to 132.6p, Standard Life fell 4.5 per cent to 202p, Prudential lost 4.1 per cent to 573p and
Aviva was 4 per cent weaker at 556p. But Friends Provident rose 1.8p or 1.2 per cent to 154.3p after reports that JC Flowers, the US hedge fund, was considering
a bid for the struggling insurer.
Wolseley (NYSE:WOS) was the single biggest faller on the FTSE 100. The supplier of plumbing and heating goods directly exposed to the troubled US housing
market said trading profit fell 25 per cent and market conditions looked set to worsen.
Lower down the market, Northern Rock rebounded 55 per cent to 100p after the government backed a proposal to convert the stricken bank's public loans of more
than £25bn into bonds in a move that made a private sale of the company more likely.
WestLB owners inject €1bn to cover loss
By Ralph Atkins in FrankfurtMonday Jan 21 2008 02:45The owners of WestLB are to inject €1bn into the troubled German public sector bank to offset an expected 2007 loss of the same amount.
Buffeted by a trading scandal as well as global financial market turmoil, the Dusseldorf-based bank will also step-up restructuring plans and seek to advance merger
talks with Helaba, its Frankfurt-based counterpart. Some €1bn in temporary write-downs were also expected.
No details of job cuts were given but German media have reported that 2,000 jobs could be endangered.WestLB owners inject €1bn to cover loss
By Ralph Atkins in FrankfurtMonday Jan 21 2008 02:45The owners of WestLB are to inject €1bn into the troubled German public sector bank to offset an expected 2007 loss of the same amount.
Buffeted by a trading scandal as well as global financial market turmoil, the Dusseldorf-based bank will also step-up restructuring plans and seek to advance merger
talks with Helaba, its Frankfurt-based counterpart. Some €1bn in temporary write-downs were also expected.
No details of job cuts were given but German media have reported that 2,000 jobs could be endangered.WestLB owners inject €1bn to cover loss
FTSE suffers biggest loss since 9/11
By Michael Taylor Reuters - Monday, January 21 05:54 pmLONDON (Reuters) -
The FTSE 100 fell 5.5 percent on Monday, suffering its largest one-day loss
since September 11, 2001 as the index tracked global markets lower on deepening fears of a possible U.S. recession.The FTSE 100 closed down 323.5 points at
5,578.2, its lowest close since June 2006 and wiping nearly 77 billion pounds from the value of its constituent stocks.
The blue-chip index has now lost more than 13 percent since the start of the year.
"Very nervous," said Jawaid Afsar, a trader at Securequity on the current equity climate. "It is very, very nerve-racking. It's very frightening and people are just
concerned (over) recession fears, credit fears ... Writedowns and all the rest of it are just part of the same sort of thing at the moment."
Last week President George W. Bush called for a package of tax cuts and other measures of around $140 billion to $150 billion (72 to 77 billion pounds) to shore
up the U.S. economy, battered by the subprime mortgage crisis and subsequent credit crunch.
But widespread doubts over the effectiveness of such action sent U.S. stocks reeling on Friday to close out the worst week for the S&P 500 in five years, while
Tokyo's Nikkei shed 3.9 percent on Thursday.
U.S. markets are closed on Monday for Martin Luther King Day.
"We are (already in a U.S. recession)," added Afsar. "Up until last week I was thinking we might escape, but when those consumer figures came out on Friday, they
clearly did show there was some concerns lingering and it was hurting the broad economy across the range.
Vulnerable financial stocks were worst hit, taking over 63 index points off the FTSE 100. Among the worst hit, HSBC and Royal Bank of Scotland shed over 6
percent.
Elsewhere oil slid by almost $2 to a six-week low below $89 a barrel on concern over an economic slowdown led by top consumer the United States.
BP and Royal Dutch Shell fell between 5.6 and 6.3 percent.
Miners, sensitive to global economic growth fears, took a beating as base metal prices slipped. Vedanta lost 8.1 percent and Antofagasta shed 4.1 percent.
Xstrata jumped as much as 4.8 percent earlier in the session after Brazilian mining giant Vale said it has held takeover talks with its Anglo-Swiss rival, which analysts
said could lead to deal worth more than $100 billion. Xstrata ended down 5.5 percent.
Also falling with the market, Rio Tinto dropped 10 percent and BHP Billiton fell 10.3 percent after the latter failed to make a higher bid as rumoured.
BHP, which proposed a three-for-one share swap last November, has until February 6 to make a formal offer for Rio, or walk away under a deadline imposed by
the UK Takeover Panel.
NORTHERN ROCK BUCKS TREND
With only four positive shares on the FTSE 100, midcap stock and troubled mortgage lender Northern Rock went against the grain by climbing 46.1 percent, after
earlier rocketing as much as 55 percent.
Britain has set a two-week deadline for a private-sector rescue of Northern Rock, as it confirmed plans to convert its almost 25 billions pounds of loans to the
stricken bank into bonds in a bid to smooth a deal.
Friends Provident was one of the four gainers on the FTSE 100, up 3.6 percent after U.S. private equity firm JC Flowers said it is considering making an offer for the
insurer.
Housebuilder Taylor Wimpey gained 1.4 percent as traders cited sector rotation.
"An incredible day of trading for the UK stock market," said Tim Hughes, head of sales trading at IG Index. "Today's focus was all about the broader market ... The
big question for investors ... is whether the re-opening of Wall Street trading is going to bring some respite from the selling pressure."
(Additional reporting by Dominic Lau and Rebekah Curtis; Editing by David Holmes)
since September 11, 2001 as the index tracked global markets lower on deepening fears of a possible U.S. recession.The FTSE 100 closed down 323.5 points at
5,578.2, its lowest close since June 2006 and wiping nearly 77 billion pounds from the value of its constituent stocks.
The blue-chip index has now lost more than 13 percent since the start of the year.
"Very nervous," said Jawaid Afsar, a trader at Securequity on the current equity climate. "It is very, very nerve-racking. It's very frightening and people are just
concerned (over) recession fears, credit fears ... Writedowns and all the rest of it are just part of the same sort of thing at the moment."
Last week President George W. Bush called for a package of tax cuts and other measures of around $140 billion to $150 billion (72 to 77 billion pounds) to shore
up the U.S. economy, battered by the subprime mortgage crisis and subsequent credit crunch.
But widespread doubts over the effectiveness of such action sent U.S. stocks reeling on Friday to close out the worst week for the S&P 500 in five years, while
Tokyo's Nikkei shed 3.9 percent on Thursday.
U.S. markets are closed on Monday for Martin Luther King Day.
"We are (already in a U.S. recession)," added Afsar. "Up until last week I was thinking we might escape, but when those consumer figures came out on Friday, they
clearly did show there was some concerns lingering and it was hurting the broad economy across the range.
Vulnerable financial stocks were worst hit, taking over 63 index points off the FTSE 100. Among the worst hit, HSBC and Royal Bank of Scotland shed over 6
percent.
Elsewhere oil slid by almost $2 to a six-week low below $89 a barrel on concern over an economic slowdown led by top consumer the United States.
BP and Royal Dutch Shell fell between 5.6 and 6.3 percent.
Miners, sensitive to global economic growth fears, took a beating as base metal prices slipped. Vedanta lost 8.1 percent and Antofagasta shed 4.1 percent.
Xstrata jumped as much as 4.8 percent earlier in the session after Brazilian mining giant Vale said it has held takeover talks with its Anglo-Swiss rival, which analysts
said could lead to deal worth more than $100 billion. Xstrata ended down 5.5 percent.
Also falling with the market, Rio Tinto dropped 10 percent and BHP Billiton fell 10.3 percent after the latter failed to make a higher bid as rumoured.
BHP, which proposed a three-for-one share swap last November, has until February 6 to make a formal offer for Rio, or walk away under a deadline imposed by
the UK Takeover Panel.
NORTHERN ROCK BUCKS TREND
With only four positive shares on the FTSE 100, midcap stock and troubled mortgage lender Northern Rock went against the grain by climbing 46.1 percent, after
earlier rocketing as much as 55 percent.
Britain has set a two-week deadline for a private-sector rescue of Northern Rock, as it confirmed plans to convert its almost 25 billions pounds of loans to the
stricken bank into bonds in a bid to smooth a deal.
Friends Provident was one of the four gainers on the FTSE 100, up 3.6 percent after U.S. private equity firm JC Flowers said it is considering making an offer for the
insurer.
Housebuilder Taylor Wimpey gained 1.4 percent as traders cited sector rotation.
"An incredible day of trading for the UK stock market," said Tim Hughes, head of sales trading at IG Index. "Today's focus was all about the broader market ... The
big question for investors ... is whether the re-opening of Wall Street trading is going to bring some respite from the selling pressure."
(Additional reporting by Dominic Lau and Rebekah Curtis; Editing by David Holmes)
World stocks routed on fears for economy
By Jeremy Gaunt, European Investment Correspondent Reuters - 1 hour 7 minutes agoLONDON (Reuters) -
World stocks nosedived and demand for safe-haven
bonds and currencies soared on Monday as fears gripped investors that a deteriorating U.S. economy would drag others down with it.
The losses on the blue-chip stock indexes of Germany, Britain and France alone amounted to more than $350 billion (180 billion pounds), or roughly the size of the
combined economies of New Zealand, Hungary and Singapore.
MSCI's main world stock index, a benchmark gauge of stock markets globally, sank 3.3 percent, falling below its 2007 bottom to lows last seen in December 2006
and taking it down more than 12 percent so far this year.
Its emerging market equities counterpart lost more than 5.5 percent. Meanwhile, the spread between emerging market bond yields and U.S. Treasury yields, a key
gauge of risk appetite, was just off its widest in two years.
"Weak global economic data, poor corporate data, increasing fears about the possibility of a recession ... have left investors drowning in a sea of red," said Henk
Potts, equity strategist at Barclays Stockbrokers.
The pan-European FTSEurofirst 300 closed down 5.8 percent, taking its 2008 year-to-date losses to more than 15 percent.
U.S. stock markets were closed on Monday for a holiday, but U.S. stock index futures were down sharply suggesting investors were not putting much hope on Wall
Street leading a rebound when it returns to business.
Elsewhere, Toronto's stock market was down around 4.5 percent and Japan's benchmark Nikkei average earlier lost 3.86 percent to close at a two-year low.
"Risk aversion is widespread as the market thinks (the economic downturn) is not just a U.S. centric story," said Paul Robson, currency strategist at RBS Global
Banking.
BEAR MARKET?
Investors were carrying through from last week's concern that a fiscal stimulus proposed by President George W. Bush would not be enough to stop the U.S.
economy from falling into recession and that the downturn will spread.
Stock markets have been in full retreat this year over the economic fears. The broad U.S. S&P index had its biggest weekly fall since July 2002 last week.
Many indexes are now more than 20 percent below their recent cycle peaks, a traditional sign that what is occurring is not just a correction but the start of a bear
market.
"It's becoming more and more difficult as the market is now in panic," said Hugues Rialan of fund manager Robeco.
Such falls on equity markets sometimes signal to large investors that it is time to buy. But leading investment bank Morgan Stanley said on Monday that was not the
case now, at least as far as Europe was concerned.
"We are not compelled to buy yet despite bearish sentiment," its European equity strategy team said in a note. "We continue to prefer cash over equities."
Recent polls show institutional investors with large cash holdings, a sign of deep concern about the future direction of assets.
RISK AVERSION
The global equity market rout, meanwhile, promoted currency investors to liquidate risky positions, lifting the low-yielding Japanese yen while the dollar generally
gained on the view no country will escape the economic downturn.
The yen hit a 2-1/2 year peak against the dollar before coming back a bit and high-yielding currencies in general sold off.
The dollar was around three quarters of a percent weaker against the yen at 105.98 yen. The euro was around 1.9 percent weaker against the yen, below 154 yen
for the first time since late August.
The euro was also 1.2 percent down on the day against the dollar at $1.4440, slipping below $1.45 for the first time in a month.
Demand was brisk for safe-haven government bonds.
The interest rate-sensitive two-year Schatz yield was at 3.355 percent, sinking 12.2 basis points. It is down around 65 basis points so far in January, well on track for
its biggest monthly decline in over 10 years, according to Reuters charts.
The 10-year Bund yielded 3.908 percent, down 6.9 basis points.
bonds and currencies soared on Monday as fears gripped investors that a deteriorating U.S. economy would drag others down with it.
The losses on the blue-chip stock indexes of Germany, Britain and France alone amounted to more than $350 billion (180 billion pounds), or roughly the size of the
combined economies of New Zealand, Hungary and Singapore.
MSCI's main world stock index, a benchmark gauge of stock markets globally, sank 3.3 percent, falling below its 2007 bottom to lows last seen in December 2006
and taking it down more than 12 percent so far this year.
Its emerging market equities counterpart lost more than 5.5 percent. Meanwhile, the spread between emerging market bond yields and U.S. Treasury yields, a key
gauge of risk appetite, was just off its widest in two years.
"Weak global economic data, poor corporate data, increasing fears about the possibility of a recession ... have left investors drowning in a sea of red," said Henk
Potts, equity strategist at Barclays Stockbrokers.
The pan-European FTSEurofirst 300 closed down 5.8 percent, taking its 2008 year-to-date losses to more than 15 percent.
U.S. stock markets were closed on Monday for a holiday, but U.S. stock index futures were down sharply suggesting investors were not putting much hope on Wall
Street leading a rebound when it returns to business.
Elsewhere, Toronto's stock market was down around 4.5 percent and Japan's benchmark Nikkei average earlier lost 3.86 percent to close at a two-year low.
"Risk aversion is widespread as the market thinks (the economic downturn) is not just a U.S. centric story," said Paul Robson, currency strategist at RBS Global
Banking.
BEAR MARKET?
Investors were carrying through from last week's concern that a fiscal stimulus proposed by President George W. Bush would not be enough to stop the U.S.
economy from falling into recession and that the downturn will spread.
Stock markets have been in full retreat this year over the economic fears. The broad U.S. S&P index had its biggest weekly fall since July 2002 last week.
Many indexes are now more than 20 percent below their recent cycle peaks, a traditional sign that what is occurring is not just a correction but the start of a bear
market.
"It's becoming more and more difficult as the market is now in panic," said Hugues Rialan of fund manager Robeco.
Such falls on equity markets sometimes signal to large investors that it is time to buy. But leading investment bank Morgan Stanley said on Monday that was not the
case now, at least as far as Europe was concerned.
"We are not compelled to buy yet despite bearish sentiment," its European equity strategy team said in a note. "We continue to prefer cash over equities."
Recent polls show institutional investors with large cash holdings, a sign of deep concern about the future direction of assets.
RISK AVERSION
The global equity market rout, meanwhile, promoted currency investors to liquidate risky positions, lifting the low-yielding Japanese yen while the dollar generally
gained on the view no country will escape the economic downturn.
The yen hit a 2-1/2 year peak against the dollar before coming back a bit and high-yielding currencies in general sold off.
The dollar was around three quarters of a percent weaker against the yen at 105.98 yen. The euro was around 1.9 percent weaker against the yen, below 154 yen
for the first time since late August.
The euro was also 1.2 percent down on the day against the dollar at $1.4440, slipping below $1.45 for the first time in a month.
Demand was brisk for safe-haven government bonds.
The interest rate-sensitive two-year Schatz yield was at 3.355 percent, sinking 12.2 basis points. It is down around 65 basis points so far in January, well on track for
its biggest monthly decline in over 10 years, according to Reuters charts.
The 10-year Bund yielded 3.908 percent, down 6.9 basis points.
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