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Recession fears unsettle stocks Shares tumble on recession fears
(about 2 hours later)
Stock markets have lost ground worldwide, as weak economic figures fuelled fears of a recession. Stock markets in Europe have slumped, as weak economic figures fuel worries of a recession.
Investors fear that government action to strengthen the financial system will not prevent a protracted downturn.Investors fear that government action to strengthen the financial system will not prevent a protracted downturn.
In New York, the Dow Jones fell 1.9%, the UK's FTSE 100 index was down 4.2% and France's Cac 40 was 3.5% lower. The UK's FTSE 100 fell 7.56%, Germany's Dax was down 6.87%, and France's Cac 40 lost 6.58%. In New York, the main Dow Jones index was down more than 4%.
Asian countries joined the global rescue effort, agreeing to set up a multi-billion dollar fund to buy banks' bad debt and support banks. Earlier Asian countries had joined the global rescue effort, agreeing to buy banks' bad debt and support banks.
The Dow Jones fell 175.5 points to 9,135.5 in early trading in New York after official data showed that retail sales fell 1.2% in September from the month before. The FTSE 100 index was down 317.73 points at 4076.48, the Dax down 357.34 points at 4841.85 points, and the Cac down 238.58 points at 3389.94.
The FTSE 100 index of the UK's top shares was down 185.7 points at 4,208.53 in early afternoon trade.
France's Cac 40 fell 128 points to 3,500.4, while Germany's Dax index was down 190 points at 5,009.17.
"The inevitable reversal for equity markets does seem to be under way," said Matt Buckland, a dealer at CMC Markets"The inevitable reversal for equity markets does seem to be under way," said Matt Buckland, a dealer at CMC Markets
The rebound is over and the risk of recession as high as ever Patrick Shum, Karl Thomson Securities UK unemployment increases againBank crisis to dominate EU talksNew York 'faces 165,000 job cuts'The rebound is over and the risk of recession as high as ever Patrick Shum, Karl Thomson Securities UK unemployment increases againBank crisis to dominate EU talksNew York 'faces 165,000 job cuts'
"We're seeing some profit taking and a reassessment of positions after the upswing, although there is an element of concern as to the longer term economic outlook creeping in," he added."We're seeing some profit taking and a reassessment of positions after the upswing, although there is an element of concern as to the longer term economic outlook creeping in," he added.
Borrowing costs fallBorrowing costs fall
However, there were signs that banks were becoming more willing to lend to each other.However, there were signs that banks were becoming more willing to lend to each other.
The cost of borrowing between banks, as measured by London interbank offered rates (Libor), fell slightly on Wednesday.The cost of borrowing between banks, as measured by London interbank offered rates (Libor), fell slightly on Wednesday.
It was the second consecutive session that Libor rates for euros, dollars and pounds had eased, and the cost of borrowing fell for all loan durations - from overnight to one year.It was the second consecutive session that Libor rates for euros, dollars and pounds had eased, and the cost of borrowing fell for all loan durations - from overnight to one year.
Meanwhile, Iceland is still reeling from the worst economic crisis in the island's historyMeanwhile, Iceland is still reeling from the worst economic crisis in the island's history
Its central bank slashed its main interest rate to 12% from 15.5% on Wednesday, and the bank said that things could deteriorate further.Its central bank slashed its main interest rate to 12% from 15.5% on Wednesday, and the bank said that things could deteriorate further.
"The impact of the collapse of the banking system will be extremely burdensome and the accompanying economic contraction very sharp," the board of governors said."The impact of the collapse of the banking system will be extremely burdensome and the accompanying economic contraction very sharp," the board of governors said.
Japan bucks trendJapan bucks trend
Australia's main share index ended 0.8% lower and India's main index slid 6%, falling below 11,000 points.Australia's main share index ended 0.8% lower and India's main index slid 6%, falling below 11,000 points.
In Hong Kong, the Hang Seng index closed down 834.58 points, or 5% at 15,998.In Hong Kong, the Hang Seng index closed down 834.58 points, or 5% at 15,998.
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 gain to date.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 gain to date.
"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."
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.
Asian actionAsian action
The move by Asian countries to set up a multi-billion dollar fund to support banks came after Europe and US had announced a series of steps to recapitalise banks and guarantee bank lending to get credit markets moving again.The move by Asian countries to set up a multi-billion dollar fund to support banks came after Europe and US had announced a series of steps to recapitalise banks and guarantee bank lending to get credit markets moving again.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
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 had committed to provide the Asian fund with $10bnPhilippines President Gloria Macapagal Arroyo said the World Bank had 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.