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Asian markets retreat after rally Asian markets retreat after rally
(about 1 hour later)
Asian stock markets have lost ground following two days of dramatic rises. Most Asia stock markets have fallen following two days of dramatic rises.
A day after recording a record one-day gain, Japan's Nikkei share index was down 1%. Shares in India, Australia and Hong Kong were also lower. Shares in India, Australia and Hong Kong all fell. However, Japan's Nikkei index reversed early losses to end the day 1% higher.
Investors fear that government action to strengthen the financial system will not prevent a worldwide recession.Investors fear that government action to strengthen the financial system will not prevent a worldwide recession.
South-east Asian nations plus Japan, China and South Korea have agreed to set up a multi-billion dollar fund to buy banks' bad debt and support banks.South-east Asian nations plus Japan, China and South Korea have agreed to set up a multi-billion dollar fund to buy banks' bad debt and support banks.
In Tokyo, the Nikkei 225 index was down 98 points at 9,350.1, while in Hong Kong the Hang Seng index slid 2.9%, or 490.9 points, to 16,342 points. Australian stocks ended 0.8% lower and Indian shares were down 4.3%, falling below 11,000 points shortly after noon in Mumbai.
In Hong Kong, the Hang Seng index was down 4.3% at 16,110.41.
However, Japan's Nikkei 225 index ended the day up 1.1% at 9,547.47 points despite falling in earlier trade. On Tuesday, it recorded its biggest ever gain.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
Indian shares opened more than 2% lower and Australian stocks ended lower.
"The rebound is over and the risk of recession as high as ever," said Patrick Shum, strategist with Karl Thomson Securities in Hong Kong."The rebound is over and the risk of recession as high as ever," said Patrick Shum, strategist with Karl Thomson Securities in Hong Kong.
"Governments across the world are cutting welfare spending and issuing more debt to help the financial system. But these measures will create a bigger problem of an economic slowdown.""Governments across the world are cutting welfare spending and issuing more debt to help the financial system. But these measures will create a bigger problem of an economic slowdown."
Asian actionAsian action
The Asian move comes after Europe and US announced a series of steps to recapitalise banks and guarantee bank lending to get credit markets moving again.The Asian move comes after Europe and US announced a series of steps to recapitalise banks and guarantee bank lending to get credit markets moving again.
Governments worldwide have pledged around $3 trillion as part of efforts to stem the financial crisis.Governments worldwide have pledged around $3 trillion as part of efforts to stem the financial crisis.
Philippines President Gloria Macapagal Arroyo said the World Bank has committed to provide the Asian fund with $10bnPhilippines President Gloria Macapagal Arroyo said the World Bank has committed to provide the Asian fund with $10bn
She said that the Asian Development Bank and the International Monetary Fund may also contribute to the fund as well as the 10-member Association of Southeast Asian Nations (ASEAN) and China, Japan and South Korea.She said that the Asian Development Bank and the International Monetary Fund may also contribute to the fund as well as the 10-member Association of Southeast Asian Nations (ASEAN) and China, Japan and South Korea.
Wall Street nervesWall Street nerves
In New York on Tuesday, Wall Street ended slightly lower at the close of trading as investors took some profits after Monday's big rises in stocks.In New York on Tuesday, Wall Street ended slightly lower at the close of trading as investors took some profits after Monday's big rises in stocks.
The Dow Jones index ended the day down 0.82% as investors turned their attention to the worsening economic outlook. Traders say Wall Street is expected to remain nervous in the weeks ahead because of recession worries.The Dow Jones index ended the day down 0.82% as investors turned their attention to the worsening economic outlook. Traders say Wall Street is expected to remain nervous in the weeks ahead because of recession worries.
Late on Tuesday the US announced that its budget deficit had reached $455bn, the highest-ever figure.Late on Tuesday the US announced that its budget deficit had reached $455bn, the highest-ever figure.
This represents more than 3% of the country's gross domestic product.This represents more than 3% of the country's gross domestic product.
Treasury Secretary Henry Paulson said it reflected the problems in the housing market, and slower economic growth.Treasury Secretary Henry Paulson said it reflected the problems in the housing market, and slower economic growth.