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Asian stocks continue world fall Asian stocks continue world fall
(40 minutes later)
Global stock markets have continued to fall amid concerns about the impact of higher global interest rates on company profits, takeovers and loan defaults.Global stock markets have continued to fall amid concerns about the impact of higher global interest rates on company profits, takeovers and loan defaults.
After London's biggest one-day percentage fall in more than three years, and woes on Wall Street, Japan's Nikkei average closed 2.4% down.After London's biggest one-day percentage fall in more than three years, and woes on Wall Street, Japan's Nikkei average closed 2.4% down.
Meanwhile Chinese and Hong Kong indexes fell about 2%, though later rebounded. Hong Kong's index was trading down 2%, while Chinese shares were also lower.
Many markets had been trading at their highest levels in recent years, buoyed by low interest rates.Many markets had been trading at their highest levels in recent years, buoyed by low interest rates.
These have fuelled high levels of consumer and corporate spending.These have fuelled high levels of consumer and corporate spending.
Worrying conditionsWorrying conditions
The Nikkei lost 418.28 points to end the week on 17,283.81. The Nikkei lost 418.28 points, or 2.4%, to end the week on 17,283.81.
On Thursday, New York's Dow Jones Industrial Average lost 311.5 points, or 2.3%, dropping to 13,473.57, while the S&P 500 shed 2.3% to 1482.66. It followed New York's Dow Jones Industrial Average losing 311.5 points, or 2.3%, dropping to 13,473.57, while the S&P 500 shed 2.3% to 1,482.66.
In London, the FTSE 100 closed 203.1 points, or 3.2%, lower at 6,251.20. Asian investors had used Wall Street's decline as an excuse to lock in profits said Kitty Chan, director at Celestial Asia Securities.
Analysts predicted a further dip when UK trading resumed, though said that because most of the year's gains had been wiped out in one day, the market was now undervalued. Worries that have been out there for the past couple of years are coming to a head right now Edward YardeniPresident, Yardeni Research
The concerns are nothing new and analysts and investors have been warning that a number of factors are combining to create worrying conditions for equity and credit markets. "After all, markets worldwide have gained considerably in recent months," she said.
In London on Thursday, the FTSE 100 closed 203.1 points, or 3.2%, lower at 6,251.20.
Analysts predicted a further dip when UK trading resumed, but said that because most of the year's gains had been wiped out in one day, the market was now undervalued.
Analysts and investors have been warning that a number of factors are combining to create worrying conditions for equity and credit markets.
"Worries that have been out there for the past couple of years are coming to a head right now," said Edward Yardeni, president of Yardeni Research."Worries that have been out there for the past couple of years are coming to a head right now," said Edward Yardeni, president of Yardeni Research.
Over the past few years there has been a boom in company profits, house prices and mergers and acquisitions.Over the past few years there has been a boom in company profits, house prices and mergers and acquisitions.
Driving this have been low interest rates that have made it cheap for companies and consumers to borrow cash and finance purchases.Driving this have been low interest rates that have made it cheap for companies and consumers to borrow cash and finance purchases.
That period of cheap cash now seems to been coming to an end with central banks worldwide, including the Bank of England, raising their rates to slow stubbornly high inflation.That period of cheap cash now seems to been coming to an end with central banks worldwide, including the Bank of England, raising their rates to slow stubbornly high inflation.
At the same time, oil prices have climbed raising fears that inflation could also pick up again because of the higher energy costs. At the same time, oil prices have climbed, raising fears that inflation could also pick up again because of higher energy costs.
'Appreciating risk''Appreciating risk'
Markets are in "risk reduction mode", said Thomas di Galoma of Jefferies & Co.Markets are in "risk reduction mode", said Thomas di Galoma of Jefferies & Co.
As stock prices tumbled bonds rallied, with investors looking for assets that could guarantee them steady, and relatively safe returns.As stock prices tumbled bonds rallied, with investors looking for assets that could guarantee them steady, and relatively safe returns.
"You have a classic flight-to-quality rally," said Dean Junkans of Wells Fargo Private Bank, adding that markets outside of bonds were "finally appreciating risk"."You have a classic flight-to-quality rally," said Dean Junkans of Wells Fargo Private Bank, adding that markets outside of bonds were "finally appreciating risk".
Bill Schultz of McQueen, Ball & Associates said: "A lot of people are moving out of stocks, out of riskier fixed income into short-term Treasuries."Bill Schultz of McQueen, Ball & Associates said: "A lot of people are moving out of stocks, out of riskier fixed income into short-term Treasuries."
"If the stock market recovers, you will see the rally pull back.""If the stock market recovers, you will see the rally pull back."