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Economy worries push stocks lower Economic worries push stocks down
(about 6 hours later)
Concerns about the state of the world economy have sent Asian and European shares down, reversing gains made ahead of the US election. Concerns about the state of world economies have sent global stock markets falling sharply.
In Europe, indexes had been down more than 4% before both the European Central Bank and the Bank of England announced interest rate cuts. The drops came despite a dramatic interest rate cut from the Bank of England and a smaller reduction from the European Central Bank.
After the announcements UK's FTSE 100 index, Germany's Dax and France's Cac 40 cut their losses to less than 2%. In New York the Dow Jones had fallen 4.5%, or 406.8 points to trade at 8,732.43 by early afternoon.
Interest rates were cut in an attempt to avoid a prolonged slowdown. In Europe, London's FTSE 100 closed down 5.7%, Frankfurt's Dax dropped 6.8% and the Cac 40 in Paris fell 6.4%.
"Extraordinary times require extraordinary actions," said Stuart Porteous, head of RBS Group Economics, commenting on the Bank of England's decision to cut rates by "unprecedented" 1.5 percentage points. Interest rates were cut in an attempt to boost consumer spending and business activity to try to avoid a prolonged slowdown.
"Extraordinary times require extraordinary actions," said Stuart Porteous, head of RBS Group Economics, commenting on the Bank of England's decision to cut rates by an "unprecedented" 1.5 percentage points to 3%.
Meanwhile, the European Central Bank cut its key rate by half a percentage point to 3.25%.
Earlier in Asia, Japan's Nikkei index had closed down 6.5% while Hong Kong's Hang Seng dropped 7.1%.Earlier in Asia, Japan's Nikkei index had closed down 6.5% while Hong Kong's Hang Seng dropped 7.1%.
On Wednesday, the US Dow Jones index had ended 5.2% lower at 9,129.
'Back to reality''Back to reality'
Figures released on Wednesday showed retail sales fell in the eurozone during September, while US figures indicated that the service sector suffered a sharper-than-expected drop in activity during October. A raft of economic data released this week has underlined the case for rate cuts.
Figures released on Wednesday showed retail sales fell in the eurozone during September, while US figures indicated that the service sector had suffered a sharper-than-expected drop in activity during October.
On Thursday, both Toyota and Isuzu Motors slashed annual profit forecasts, providing a further reminder of the weakness of the global economy.On Thursday, both Toyota and Isuzu Motors slashed annual profit forecasts, providing a further reminder of the weakness of the global economy.
"We had a week of rebound and then we're coming back to reality" said Francis Lun, general manager of Ful bright securities in Hong Kong. "We had a week of rebound and then we're coming back to reality" said Francis Lun, general manager of Fulbright securities in Hong Kong.
"Despite the world euphoria over the election, the world's economy hasn't changed," he added."Despite the world euphoria over the election, the world's economy hasn't changed," he added.