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World Markets Tumble on Wall Street Drop

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By TOBY ANDERSON
The Associated Press
Monday, March 3, 2008; 6:50 AM

LONDON -- European and Asian stock markets tumbled Monday as investors reacted nervously to a steep decline on Wall Street Friday after disappointing economic and corporate news rekindled worries about a U.S. recession.

The U.K.'s benchmark FTSE 100 fell 1.3 percent to 5,808.1, while Germany's DAX Index declined 1.5 percent to 6,652.08. France's CAC 40 slipped 1.5 percent to 4,717.57.

U.S. stock index futures also were down, suggesting Wall Street was poised for another drop Monday.

In Asia, Japan's benchmark Nikkei 225 index plunged 4.5 percent to close at 12,992.18. Markets in Hong Kong, South Korea, India and Australia also fell sharply, but shares in mainland China advanced.

Investors dumped stocks after a series of depressing economic and earnings reports Friday out of the United States _ a vital export market and the world's largest economy _ sent the Dow Jones industrial average down 315.79, or 2.51 percent, to 12,266.39.

"Traders will be looking for figures due out later this afternoon to come in better than expected, which could give the futures a bit of a kick," said Claire Collingwood, a dealer at CMC Markets in London. "However anything weaker could of course send the major indices lower still."

The bad news included poor quarterly results from American International Group Inc. and Dell Inc. and weaker-than-expected results on the Chicago purchasing managers index, which painted a dreary picture of the manufacturing sector.

"It's all due to fears of a recession in the U.S.," said CommSec chief equities economist Craig James in Sydney, Australia. "This is a global market sell-off."

The dollar's drop to a three-year low against the yen also weighed on sentiment in Tokyo as dollar weakness erodes overseas earnings at Japan's key exporters. The dollar fell as low as 102.59 yen before recovering some to 103.10 yen, down from 103.96 yen late Friday in New York.

Asian markets, which have fallen much of the year so far, had staged a modest recovery through the middle of last week, with Tokyo's Nikkei climbing to a seven-week high last Wednesday.

But pessimism returned Monday, sending Hong Kong's Hang Seng index down 3.1 percent to close at 23,584.97. India's benchmark Sensex tumbled 5.3 percent to a provisional close of 16,639.54.

U.S. economic growth slowed to a 0.6 percent pace in the fourth quarter and some analysts believe the economy is already shrinking.


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© 2008 The Associated Press