Global Investors Panic, Stocks Plummet

A massive sell-off on Wall Street and escalating fears of a global recession sent world stock markets plunging Friday, with Japan's benchmark index dropping more than 10 percent at one point.

"Selling is unstoppable in New York and Tokyo," said Yutaka Miura, senior strategist at Shinko Securities Co. Ltd. in Tokyo. "Investors were gripped by fear."

Markets in Hong Kong, Australia, South Korea, Thailand and the Philippines were all down more than 7 percent. Shanghai's index was down 3.8 percent.

Hong Kong's key stock index had tumbled 7.2 percent. The blue chip Hang Seng index plunged 1,146.37 points, or 7.2 percent, to 14,796.87 Friday after falling by more than 9.5 percent at one point.

It is the first time the benchmark index has fallen below the 15,000-level since January 2006.

Indonesian authorities suspended trading indefinitely on the Jakarta Stock Exchange after they had halted trading Wednesday when the index plunged more than 21 percent over three days earlier this week. The Thai exchange was also closed in Bangkok due to sharp drops.

As the European markets opened, the trend was the same. In Austria, trading was suspended on the Vienna Stock Exchange after stocks tumble 10 percent at opening bell.

The FTSE-100 index of leading British shares fell 10 percent in the first few minutes of trading on the London Stock Exchange.

In Tokyo, the gut-wrenching drama left individual investors shellshocked.

Kenji Akasaka, 69, president of a local printing company, said he had never seen it this bad in the 40 years he has traded stocks. He said he invests mainly in blue-chips including Toyota Motor Corp. and Nintendo Co.

"I pray before I go to bed that the Dow will recover," said Akasaka, 69, as he scanned a monitor displaying the latest market levels. "I get sleepless, thinking about losses."

Japan's benchmark Nikkei 225 stock average plummeted 10.3 percent before closing down 9.62 percent at 8,276.43 points. The Tokyo bourse and the Osaka Securities Exchange briefly suspended some futures and options trading during the morning.

Indonesian stock trading was frozen indefinitely Friday to "avoid deeper panic," the bourse president said.

A suspension was imposed on the Jakarta Stock Exchange on Wednesday in response to sudden, steep loses, but authorities had planned to resume trading Friday morning. The last-minute reversal came just minutes before the scheduled reopening in Jakarta as Asian stocks tumbled.

In India, the Bombay Stock Exchange's benchmark 30-stock Sensex plunged 642 points, or 5.7 percent, to 10,686 points in early Friday trading.

On the broader National Stock Exchange, the 50-company S&P Nifty index has declined 5.1 percent to 3,332.5 points.

The Sensex dropped 1,088 points seconds after opening to a low of 10,239.8 points.

The markets pulled back slightly after India's central bank almost immediately announced an additional 1 percent cut in the cash reserve ratio, or the money banks are required to keep on hand.

The Reserve Bank of India said in a statement the decision was taken "on a review of the evolving liquidity situation in the context of global and domestic developments."

In spite of bank bailouts and injections of capital amounting to billions of dollars by central banks around the world, CBS News correspondent Sheila MacVicar reported there is still no confidence in the market, and no confidence between banks.

"That means they are still not lending to each other. That's the grease that makes the global economy go around, and without that, the system remains stuck," MacVicar reported from London's financial district.

The world sell-off follows a 7.3 percent plunge in the Dow Jones industrial average Thursday to close below the 9,000-line for the first time in five years. Stocks nose-dived after a major credit-rating agency said it might cut its rating on General Motors Corp. and Ford Motor Co., further rattling investors already fretting over the impact of tight credit on the economy.

General Motors stock fell below $5 a share Thursday, a level not seen since the 1950s, reported CBS News business correspondent Anthony Mason. Just last month, GM produced a video to reassure its investors.

The Dow's seven-day decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.

The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed even after a string of interest rate cuts by central banks in the U.S., Europe and Asia this week in an attempt to resuscitate lending.

"There's no bottom to the stock markets now," said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. "There's no clue when it will stop."

Analysts also said there's pressing need for the U.S. to quickly implement the $700 billion plan to buy up toxic mortgage-related securities from troubled banks and financial institutions that are at the core of problem.

In Japan, insolvencies in the insurance and real estate sectors accelerated the pessimism.

Mid-sized Yamato Life Insurance Co. went bankrupt Friday on losses related to global stock woes, while New City Investment Corp.'s bankruptcy filing made it Japan's first real-estate investment trust to fail.

Japanese Economy Minister Kaoru Yosano sought to reassure the country even as markets tumbled.

"We need to make sure that we don't get pulled too much by global tides," Yosano said. "I hope investors Japan's makes decisions calmly based on Japan's economic fundamentals."

Lucinda Chan, associate director of Macquarie Equities in Sydney, called the market moves "ghastly."

"It is a very different and very unprecedented climate at the moment," she said. "Growth is going to be a major concern in this market and that is why the Australian market is getting a very hard pinch because we are a commodity export nation."

Asia's falls come as finance ministers and central bankers from the Group of Seven industrialized nations prepared to meet later Friday in Washington.

"Investors are not so sure that the G7 will announce effective measures to contain the global financial crisis," Miura in Tokyo said.

In currencies, the dollar fell to 98.69 yen Friday afternoon Asia from 98.82 yen late Thursday. The euro stood at $1.3548 from $1.3560.