Europe follows Asian markets tumble

Author : Miruna-Ioana Fulea | Monday, October 27, 2008
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 European markets opened lower on Monday, adding to sell-offs that raced across Asia, including a near-13 percent plunge of Hong Kong’s Hang Seng, as investors sold amid deepening fears of a global recession.

Major markets — in London, Paris and Frankfurt — were all off at least 4 percent in early trading.

Wall Street was also poised to open lower, with Dow futures down more than 200 points.

In Asia, Hong Kong’s major index closed down 12.7 percent, while Tokyo’s bellwether Nikkei lost more than 6 percent, closing at its lowest level in 26 years. The index stumbled as the yen fluctuated near a record high against the dollar — a condition that makes Japanese exports more expensive. See market updates

In the Philippines the key index lost 12.3 percent.

It was the lowest close since September 2004 and the biggest one-day drop since February 2007, triggering a circuit-breaker that halted trading for 15 minutes, The Associated Press reported.

In India, Mumbai’s BSE SENSEX was off about 5 percent in afternoon trading.

In Taipei, the Taiwan Weighted was off 4.7 percent, and Australia’s All Ordinaries index finished the day off 1.7 percent.

The KOSPI in Seoul, South Korea, was the lone Asian bright spot, closing up nearly a percent. The index rallied after South Korea’s central bank slashed its key interest rate Monday by three-quarters of a percentage point — its largest cut ever — in an effort to fend off the global financial turmoil.

Financial ministers and central bank presidents of the world’s seven leading industrialized nations, meeting in Tokyo, said yen volatility and the markets had their full attention.

“We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability,” the Group of Seven said Monday in a statement.

The finance ministers and bankers said they would “cooperate where appropriate” to help stabilize world markets. They said they were monitoring the situation closely.

“We reaffirm our shared interest in a strong and stable international financial system,” the statement said.

The market action comes after a weekend of Asian-European talks in Beijing, during which leaders from 43 nations, along with the heads of the European Commission and ASEAN, vowed to act together on the financial crisis.

Mideast markets also dropped sharply during the weekend, despite the announcement by Saudi King Abdullah that he would invest billions of Saudi riyals into the market.

On Sunday, Kuwait’s central bank stepped in to prop up one of the country’s biggest banks, AP reported. Also in Saudi Arabia, the government said it would deposit $2.7 billion dollars into the Saudi Credit Bank, AP cited Al-Ektisadiya as reporting.

In Europe, the International Monetary Fund said Sunday it had reached a tentative agreement to provide Ukraine with $16.5 billion in loans, AP said. The IMF also announced that emergency help for Hungary had cleared a key hurdle.

Wall Street closed last week with another sell-off, as investors bought into the notion that a recession is imminent if not already under way.

The Dow Jones industrial average lost 312 points, or 3.6 percent. The Standard & Poor’s 500 index lost 3.5 percent, and the Nasdaq composite lost 3.2 percent.
European markets declined Friday as well, with stocks in London, Paris and Frankfurt — the continent’s most influential markets — all down between 3 and 5 percent.

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