World Markets Mirror Wall Street's Losses

Dismal Economic Reports Prompt Fear Of Recession, Another Day Of Selling After Wall Street Plunge

(CBS/AP)  European stock markets were modestly lower Thursday after Japan's Nikkei index closed at a five-year low and Wall Street's Dow Jones index ended down nearly 6 percent Wednesday over mounting recession fears.

Europe's indexes could have been harder hit but for a late recovery in Asia, which helped the major indexes pare back a large chunk of their earlier losses.

Britain's FTSE 100 index of leading shares was down 35.24 points, or 0.9 percent, at 4,005.65, while Germany's DAX was 77.34 points, or 1.7 percent, at 4,493.73. The CAC-40 in France was 34.01 points, or 1.0 percent, lower at 3,264.17.

Earlier Japan's Nikkei 225 stock average tumbled 7 percent at the open but recovered to close down 2.5 percent at 8,460.98, while Hong Kong's Hang Seng Index was down 4.7 percent at 13,603 after falling more than 6 percent earlier. South Korea's market was down more, as the benchmark Kospi fell nearly 10 percent at one point but closed down 7.5 percent at 1,049.71.

The latest stock market jitters around the world have been stoked by a stream of disappointing earnings updates, particularly in the U.S. over the last few days. The worries contributed to a 6.1 percent drop in the Standard & Poor's 500 index on Wall Street on Wednesday that left it at its lowest level since April 2003.

Fears about the economy have become the primary concern as worries over credit markets and the banking system have been assuaged, for now at least, by government efforts to shore up banks, as well as massive liquidity boosts from the world's leading central banks.

"So long as there's this rather blunt, and perhaps rather realistic, fear of a global recession looming, then there's certainly scope that stocks will continue to struggle to find support in the short to medium term," said Matt Buckland, a dealer at CMC Markets.

Though the solvency of banks across Europe is less of an issue in the markets, their upcoming earnings are likely to be hit hard by the global economic downturn and that weighs on their share prices. Notable losers Thursday were BNP Paribas SA, down 2.5 percent and Barclays PLC, which was 5.6 percent lower.

Traders say they're looking for the same sort of injections of capital they've seen from governments in the U.S. and Europe, reported CBS News correspondent Mark Phillips.

"What market participants want to see from the government is not the announcement but the actions," said Masaaki Kanno of J.P. Morgan Chase. "So if they take actions the market will respond… the announcement is not enough."

One bright spot was the performance of Nestle SA, the world's biggest food and drink company, which saw its shares 5.2 percent in Zurich after it reported buoyant sales growth for the first nine months of the year.

Though the markets remain preoccupied with the general economic environment they continue to keep a close watch on interbank lending rates, which continue to fall, albeit relatively slowly.

Figures released Wednesday showed that the rate on three-month loans in dollars, known as the London Interbank Offered Rate, or Libor, fell by 0.29 percentage point, to 3.54 percent, while the so-called European Interbank Offered Rate for three-month euro-denominated loans dropped 0.03 percentage point to 4.936 percent, the lowest rate since June 5.

"Softer earnings and growth risks are dragging down equities, with government-central bank efforts to stabilize the money markets still bearing fruit with Libor rates easing further," said Stuart Bennett, a senior strategist at Calyon.

Abnormally high interbank lending rates have been the catalyst for the crisis in the financial markets over recent weeks, raising fears they would choke off credit to businesses and individuals.

World leaders will gather in Washington on Nov. 15 to discuss the meltdown. Topping the agenda will be a discussion of the underlying causes of the financial crisis and what actions are needed to keep it from happening again, reported CBS News White House correspondent Mark Knoller.

Earlier in Asia, Japanese electronics powerhouse NEC Corp. plunged 8.5 percent after slashing its full-year earnings estimates Wednesday, blaming weaker demand for mobile phones and computer chips.

Japanese exporters were also battered by the surging yen against the dollar and euro. A stronger yen decreases the value of overseas profits when repatriated to Japan.

Mazda Motor Corp. plummeted 10.9 percent, Isuzu Motors Ltd. 9.6 percent, and Honda Motor Co. fell 6.6 percent. Game console maker Nintendo Co., which releases earnings Oct. 30, closed 8.65 percent lower.

Elsewhere Australia's key index pulled back more than 4 percent as slumping world commodity prices sent resource companies lower. Rio Tinto fell more than 14 percent while rival BHP Billiton sank more than 9 percent.

Oil rebounded modestly after plummeting more than $5 overnight to near 16-month lows. Sweet crude for December delivery rose $0.77 to $67.52 a barrel.

On the currency front, the dollar was little changed at 97.53 yen. In two months, the yen has gained more than 10 percent against the dollar.

The euro and the pound were both 0.1 percent lower at US1.2839 and US1.6257 respectively.

[luvcomments]

I''m still baffled by the failure of the investment banks, the government, et al to recognize that the whole shebang was guaranteed to implode since all the "values" of the assets were no more than hot air expanded by greed. Surely they knew that 2,000+ ethical appraisers were black-listed by the mortgage companies and brokers for refusing to produce false, inflated real estate values? And this was just a small part of the gigantic swindle. I''m no mental giant but I always predicted that "value" based on nothing was inevitably going to all come tumbling down, just as it did several years ago. Too bad all the so-called educated - but greedy - business giants don''t believe that history repeats itself if you don''t have the capacity to learn from past mistakes. And that''s fine if it''s only their own personal finances on the line but not when they are messing around with others'' money.

[gop_will_win]

Ha ha liberals, the market is up today on the good news of more unemployment clamins and a spike in the forclosure rate.

[gop_will_win]

you must be well rewarded then


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Posted by jamesm12341
=========================
No james, they sound like a jealous liberal.

[doilo0kligaf]

You know what i changed my mind about Obama! I think he will be better for national security and the economy!

Besides I think Sarah Palin is really a Nazi!

Breaking news:
www.chilitoz.com
Thousands of pictures of NAZI SS Officers and Adolf Hitler found property owned by Sarah and Todd Palin. Also an apparent Altar dedicated to the notorious Angel of death Dr. Joseph Mengele along with thousands of NAZi era coins.

[the-abiss]

The banks loaned money to people who were unlikely to be able to repay those loans. The people who were able to pay their loans are now being forced to assume the debt of those who could not pay. Companies that have not failed like the banks did get no help.

The moral of the story? The Republican party rewards failure!

You must have read the wrong story. The Dems are all about rewarding failure. They pushed for the risky lending, they did not want added oversight of Fannie and Freddie, they pushed for the bailout. The republicans held out on 1st vote but as usual all politicians have a price. The Dems added enough pork to the bill to buy some yes votes. You are correct about those of us that did it right will have to pay for this but your blame is very misguided. We all need to take the time to do the research and pin this down to the right individuals that had control and pushed or voted for this bail-out and use our votes to get rid of them (both parties) or this will never change.

[ajaxtheleast]

If it wasn''t common knowledge that the whole

of the Europian and Asian stock markets

shared one I.Q. POINT one would say that

the totality of their market strategy

was nothing more than follow the leader.

But since following the leader takes
some intelligence it has to be just the
happenstance of random stupidity that
each time has them parareling
the U.S. market

[downtowner97]

The banks loaned money to people who were unlikely to be able to repay those loans. The people who were able to pay their loans are now being forced to assume the debt of those who could not pay. Companies that have not failed like the banks did get no help.

The moral of the story? The Republican party rewards failure!

[andor3]

"Isnt there like a theory that there is like an upper and lower bound to the DJIA"

not sure there is an upper bound, but the lower bound is always zero.

[samthetvcat]

Isn''t there like a theory that there''s like an upper and lower bound to the DJIA and that the market''s just basically ping-ponging back and forth between like 8,000 (or slightly below) and 10,000 (or slightly below) or whatever?

Because all that news that the economy was in the dumps and that all the indicators were going to show it was on some level kind of absorbed into the market a couple of weeks ago, wasn''t it?

Like when the actual indicators come out and they''re bad the market reacts with big sell-offs, but when they''re not as bad as expected the there have been like some big gains too . . . maybe that 2,000 point movement is really just sort of professional trader noise given that the economy''s sort of stagnant (?)

I don''t know - maybe that''s just wishful thinking because those big sell-offs a couple of weeks ago were so stressful!