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Recession fears weigh on markets Recession fears weigh on markets
(10 minutes later)
Asian and European share indexes have continued to fall sharply on Tuesday amid fears of a recession in the US leading to a global economic slowdown.Asian and European share indexes have continued to fall sharply on Tuesday amid fears of a recession in the US leading to a global economic slowdown.
London's FTSE 100 index has had a bumpy day, falling more than 3% at the open. It has since recovered and was recently trading between 1% higher and 1% lower.London's FTSE 100 index has had a bumpy day, falling more than 3% at the open. It has since recovered and was recently trading between 1% higher and 1% lower.
Earlier, Asian markets had tumbled with Japan's Nikkei index closing down 5.7%, taking its decline this year to 18%.Earlier, Asian markets had tumbled with Japan's Nikkei index closing down 5.7%, taking its decline this year to 18%.
Many analysts are predicting indexes could fall further in coming weeks.Many analysts are predicting indexes could fall further in coming weeks.
In Frankfurt, the Dax index was down 2.4% while the Cac 40 in Paris was trading down 0.8%. "I think we can safely say that the stomping, snorting optimistic beast of a market is fleeing the field, to be replaced by something scary and grizzly," said BBC Business Editor Robert Peston.
US direction
Much will depend on the day's stock market trading in New York.
US markets were closed on Monday for a public holiday and index futures suggest that shares could be set for their biggest falls since the attacks of 11 September 2001.
In Frankfurt, the Dax index was down 2.4%, while the Cac 40 in Paris was trading down 0.8%.
The recent falls were triggered by fears of a global recession, after growing concern that a proposed US stimulus package, which would involve about $145bn (£76bn) in tax cuts to encourage spending, might not be enough.The recent falls were triggered by fears of a global recession, after growing concern that a proposed US stimulus package, which would involve about $145bn (£76bn) in tax cuts to encourage spending, might not be enough.
FTSE 100 - BIGGEST FALLS 20/10/87 down 12.2%19/10/87 down 10.8%26/10/87 down 6.2%11/09/01 down 5.7%22/10/87 down 5.7%22/01/08 down 5.5%FTSE 100 - BIGGEST FALLS 20/10/87 down 12.2%19/10/87 down 10.8%26/10/87 down 6.2%11/09/01 down 5.7%22/10/87 down 5.7%22/01/08 down 5.5%
Dominique Strauss-Kahn, the head of the International Monetary Fund, said the global economic situation was "serious" and that all countries in the world were suffering in the wake of a slowdown in US growth.Dominique Strauss-Kahn, the head of the International Monetary Fund, said the global economic situation was "serious" and that all countries in the world were suffering in the wake of a slowdown in US growth.
The drop in stock markets was also having an effect on other assets. The drop in stock markets has also been having an effect on other assets.
Government bond prices have risen, as many investors look for assets which guarantee safer returns.Government bond prices have risen, as many investors look for assets which guarantee safer returns.
At the same time, crude oil and metals prices have fallen because of expectations that slower global economic growth will hurt demand.At the same time, crude oil and metals prices have fallen because of expectations that slower global economic growth will hurt demand.
'Remain calm''Remain calm'
In Mumbai on Tuesday, India's main stock index, the Sensex, fell 9.8% within minutes, triggering an automatic one-hour halt in trading.In Mumbai on Tuesday, India's main stock index, the Sensex, fell 9.8% within minutes, triggering an automatic one-hour halt in trading.
Later, it recovered some of its losses, to match its 7.4% fall on Monday, which was the Sensex's worst day. Later, it recovered some of its losses, to close 5.0% lower following its 7.4% fall on Monday, which was the Sensex's worst day.
India's Finance Minister P Chidambaram has urged Indian investors to "remain calm" and advised them to "stay invested".India's Finance Minister P Chidambaram has urged Indian investors to "remain calm" and advised them to "stay invested".
It basically stems from the United States Hiroko OtaJapanese minister for economic and fiscal policy Q&A: Stock market fallsBear market may be loomingIndian investors despairIt basically stems from the United States Hiroko OtaJapanese minister for economic and fiscal policy Q&A: Stock market fallsBear market may be loomingIndian investors despair
Mr Chidambaram said that "enough liquidity will be provided to the brokers to tide over the present crisis".Mr Chidambaram said that "enough liquidity will be provided to the brokers to tide over the present crisis".
In China, the main Shanghai Composite Index closed down 7.2% at a five-month low, having lost 17% in the past six days of trading.In China, the main Shanghai Composite Index closed down 7.2% at a five-month low, having lost 17% in the past six days of trading.
Trading was also suspended briefly in South Korea, where the market eventually closed down 4.4%, while Hong Kong's Hang Seng index suffered its biggest daily fall, closing down 8.7%.Trading was also suspended briefly in South Korea, where the market eventually closed down 4.4%, while Hong Kong's Hang Seng index suffered its biggest daily fall, closing down 8.7%.
Sydney's market continued its longest losing streak for 26 years, closing 7.1% lower.
Global co-operationGlobal co-operation
Sydney's market continued its longest losing streak for 26 years, closing 7.1% lower.
The Japanese government said it saw no reason to intervene to support the markets and a Bank of Japan meeting left interest rates unchanged.The Japanese government said it saw no reason to intervene to support the markets and a Bank of Japan meeting left interest rates unchanged.
"Stock markets across the world are falling and it basically stems from the US," said Hiroko Ota, the minister for economic and fiscal policy."Stock markets across the world are falling and it basically stems from the US," said Hiroko Ota, the minister for economic and fiscal policy.
"It is difficult at the moment to mull action by Japan alone. Instead, we should co-operate globally," she said."It is difficult at the moment to mull action by Japan alone. Instead, we should co-operate globally," she said.
The Brazilian stock market - the largest in the region - fell by 6.6% on Monday, while Mexico's IPC index fell 5.4%.
Brazil's real dropped by 2.5% against the dollar, and Mexico's peso lost 0.9% against the US currency, registering a five-month low.