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Global stocks see further falls Global stocks see further falls
(30 minutes later)
Asian stocks have fallen sharply in Wednesday trading after further overnight declines in the US as housing market and credit fears persist. European stocks have fallen sharply in early Wednesday trading after more declines in the US as housing market and credit fears persist.
Japan's Nikkei index lost 275 points or 1.7%, to close at 16,013. Wall Street's Dow Jones had earlier finished Tuesday down 280 points or 2.1% to 13,042. London's FTSE 100 index was down 43 points to 6,059 in initial exchanges, while Frankfurt's Dax index had lost 57 points to 7,373.
The latest share falls was caused by a major stock brokerage warning that the credit squeeze will hurt bank profits. The latest share falls was caused by Merrill Lynch brokers warning that the credit squeeze will hurt bank profits.
Investor confidence was also hit by weak US consumer sentiment figures.Investor confidence was also hit by weak US consumer sentiment figures.
Europe's early falls were mirrored in the Far East, where Japan's main Nikkei index closed down 275 points, or 1.7%, to 16,013.
Wall Street's Dow Jones closed down 280 points, or 2.1%, to 13,042 on Tuesday.
Stock downgradesStock downgrades
The latest warning about the impact of the problems in the credit market - centred on the crisis in the US sub-prime mortgage sector - was given by brokers at investment bank Merrill Lynch.The latest warning about the impact of the problems in the credit market - centred on the crisis in the US sub-prime mortgage sector - was given by brokers at investment bank Merrill Lynch.
They downgraded their opinion of stocks in three firms exposed to the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup.They downgraded their opinion of stocks in three firms exposed to the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup.
The mood of global investors has been further hit by released minutes of the most recent meeting of the Federal Reserve, which suggested a US interest rate cut might not be imminent.The mood of global investors has been further hit by released minutes of the most recent meeting of the Federal Reserve, which suggested a US interest rate cut might not be imminent.
The minutes showed that while the committee's members realised that the problems in the financial markets might need a policy response, they did not act at the start of this month because they were keeping their focus on inflation.The minutes showed that while the committee's members realised that the problems in the financial markets might need a policy response, they did not act at the start of this month because they were keeping their focus on inflation.
The sub-prime mortgage sector gives higher risk loans to people with poor credit histories.The sub-prime mortgage sector gives higher risk loans to people with poor credit histories.
Sub-prime default levels have risen to record highs in the US over the past year in the face of higher mortgage rates, raising fears that this could hamper credit availability in the broader market, not just in America, but around the world. Sub-prime default levels have risen to record highs in the US over the past year in the face of higher mortgage rates.
This has raised fears that this could hamper credit availability in the broader market, not just in America, but around the world.