Thursday October 23, 04:50 PM
World stocks slide on recession jitters and corporate woes
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LONDON (AFP) - World (WRGR.TA - news) stock markets took another heavy hit on Thursday as investors were unable to overcome fears of a global recession and fretted over downbeat corporate projections.
Share prices tumbled in Asia, Europe and in early deals on Wall Street in the wake of heavy losses on Wednesday, which came despite fresh government measures to snuff out a financial crisis threatening the critical flow of credit to businesses.
On Thursday some of the world's biggest companies gave voice to deep pessimism regarding their prospects in the months ahead.
Investors appeared to ignore the crucial interbank market, where interest rates continued to weaken, indicating that banks -- bolstered by government support moves -- were at last starting to lend money to one another.
Wall Street shares fell in volatile morning trade, giving back opening gains after a huge selloff a day earlier on recession fears.
The Dow Jones Industrial Average reversed course and fell 0.77 percent to 8,453.66 at 1353 GMT after a tumble of more than 500 points on Wednesday.
The tech-heavy Nasdaq (NASDAQ: news) lost 1.10 percent to reach 1,597.98.
After heavy declines in Asia, European exchanges were deep into negative territory in late trade. The London FTSE 100 index was down 0.98 percent, Paris 1.86 percent and Frankfurt 2.63 percent.
"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," said CMC Markets dealer Matt Buckland in London.
Sentiment suffered from disappointing corporate news.
ArcelorMittal (Amsterdam: NSCNL0001MT7.AS - news) -- the world's biggest steel producer -- said the financial crisis has forced it to review its global growth projects while German automaker Daimler (Xetra: 710000 - news) warned of weaker 2008 profits for a second time amid "a high degree of uncertainty" over the outlook.
Fiat (Milan: F.MI - news) of Italy, another big auto group, said its 2008 financial results would be at the lower end of its projection range and warned that tough market conditions next year could cut into profits.
In Paris shares in Franco-Dutch airline Air France (Paris: FR0000031122 - news) -KLM plunged more than 10 percent after its chairman foresaw three years of zero growth.
And in Tokyo, Sony Corporation (Munich: 853687 - news) warned that the global economic slowdown, a stronger yen and fierce price competition would slash its profits by more than half in the current financial year.
All Asian markets suffered dizzying losses on Thursday. Tokyo's Nikkei index (news) fell 2.46 percent, after plunging by more than seven percent at one stage to hit levels last seen in May 2003. Australia closed down 4.4 percent and Hong Kong 3.6 percent.
Worst hit in Asia was Seoul, which ended down 7.4 percent, while Shanghai declined by 1.07 percent and Mumbai dipped 3.92 percent.
"Escalating concern about a global recession has prompted investors to bail out of growth-sensitive assets," said NAB Capital analyst Robert Henderson.
While the outlook for the major economies is hardly rosy, "the picture is even uglier for emerging economies," he warned.
Thursday's stock market falls came despite an announcement of further measures designed to restore confidence in the finance sector and among consumers.
Japan's central bank said it had injected 600 billion yen (6.2 billion dollars) into the short-term money market while the International Monetary Fund moved to bail out Pakistan, which could need as much as 15 billion dollars to help pay mounting foreign debt.
Governments around the world have unveiled packages over the last month totalling more than three trillion dollars, including loan guarantees and cash injections, to restore confidence to the financial system and reverse a sharp slowdown in lending.
Meanwhile in Stockholm on Thursday, the Swedish central bank slashed its key interest rate by half a percentage point to 3.75 percent and said it planned to make further cuts within six months.
Noting that the global financial crisis had worsened since mid-September, the bank said the turmoil was "now clearly affecting developments in Sweden."
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