World stocks sink on renewed Europe fears
By ALEX KENNEDY
SINGAPORE (AP) - World stock markets tumbled Tuesday, extending Wall Street's sell-off as the sliding euro fueled a new wave of pessimism about the global economy's health.
Renewed worries about Europe's debt problems rattled already anxious investors, who grew more uncertain about the outlook for the U.S. and global economies.
In early trading in Europe, Britain's FTSE 100 fell 2.3 percent, Germany's DAX dropped 2.6 percent, and France's CAC-40 sank 3.1 percent. Futures pointed to losses of 2 percent or more for major U.S. stock indexes on Tuesday.
Earlier in Asia, Japan's Nikkei 225 stock average shed 3.1 percent to 9,459.89 as the yen's strength against the common European currency hammered exporters.
Hong Kong's Hang Seng index slid 3.5 percent to 18,985.50 while benchmarks in Australia, Indonesia, Thailand, Taiwan and Malaysia lost 3 percent or more. Stock markets in India and Singapore were down more than 2 percent while China dropped 1.9 percent.
The weekend rescue of a small Spanish bank exacerbated investor pessimism about Europe's financial health. The Bank of Spain stepped in to rescue Cajasur after it failed to complete a merger. It was only the second time Spain's central bank had saved a regional lender.
The euro's weakness also unnerved markets. Traders have been dumping the 16-nation currency on fears that massive debts will cause defaults by weaker countries in the European Union.
Still, some investors consider Asian stocks oversold given the region's strong economic growth and low government debt.
"I think it's a great time to buy on dips," said Tey Tze Ming, a trader with Saxo Capital Markets in Singapore. "Fundamentally, things in this region haven't changed. Growth is still good."
South Korean financial markets fell sharply after reports that North Korean leader Kim Jong Il ordered his military to be on combat alert amid rising tensions on the peninsula.
South Korea's benchmark stock index dropped as much as 4.5 percent before recovering some to finish 2.8 percent down at 1,560.83 - its lowest close in more than three months. The South Korean won, meanwhile, slid to its weakest level against the dollar in more than 10 months before paring some losses to finish at 1,250 to the greenback.
"The main reason is the risk of war with North Korea," Kim Joong-hyun, a strategist at Shinhan Investment Corp. in Seoul, said of the declines, though he added that concern over Europe's debt crisis was also a factor.
A group in South Korea that monitors events in North Korea said Tuesday that Kim Jong Il last week ordered the military to get ready for combat, shortly after South Korea officially blamed his regime for the March 26 sinking of one of its warships that killed 46 sailors.
South Korean officials and other North Korea monitoring groups could not immediately confirm the report by Seoul-based North Korea Intellectuals Solidarity, which cited unidentified sources in North Korea. The Defense Ministry and the Joint Chiefs of Staff said they have not obtained any signs suggesting unusual activity by North Korea's military.
The Bank of Korea, South Korea's central bank, said it would hold a special task force meeting Tuesday to discuss the currency turmoil, according to spokesman Kim Seong.
In New York on Monday, the Dow fell 126.82, or 1.2 percent, to 10,066.57. The S&P 500 index fell 14.04, or 1.3 percent, to 1,073.65, and the Nasdaq composite index fell 15.49, or 0.7 percent, to 2,213.55.
Crude oil for July delivery fell $1.89 to $68.33 a barrel in electronic trading on the New York Mercantile Exchange.
In currencies, the dollar slipped to 89.81 yen from 90.22 yen late Monday. The euro sank to $1.2236 from $1.2342.
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AP Business Writer Kelly Olsen in Seoul contributed to this report.
http://apnews.myway.com/article/20100525/D9FTON500.html
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Stocks plummet on economic worries
Stocks open sharply lower on continued worries about a potential slowdown in global growth
NEW YORK (AP) -- The Dow Jones industrials plunged below 10,000 Tuesday as traders turned away from stocks amid worries about the global economy and tensions between North and South Korea.
The Dow fell 206.51, or 2.1 percent, to 9,859.76. It closed at 10,066 on Monday and has fallen 1,346 points, or more than 12 percent, from its recent high of 11,205, reached April 26.
Investors also exited the euro and commodities including oil and again sought the safety of Treasurys. That sent yields and interest rates lower. The benchmark 10-year note's yield fell to its lowest level since April 2009.
World stock markets also fell sharply.
A disappointing report on U.S. home prices added to the market's dark mood. The Standard & Poor's/Case-Shiller 20-city home price index fell 0.5 percent in March from February, a sign that the housing market remains weak even as mortgage rates are near historic lows. There are concerns that last month's expiration of the government's home buyer tax credit will hurt sales in the coming months.
A better-than-expected report on consumer confidence had no lasting effect on trading. The Conference Board's consumer confidence index rose for the third straight month, climbing to 63.3 in May from 57.7 last month.
Investors are not focusing as much on current signs of growth, but instead trying to gauge where the global economy will be later this year. Pessimism, particularly about Europe, has replaced the hopeful tone the market took early in the year.
"Market participants feel like they're walking on eggshells," said Oliver Pursche, executive vice president at Gary Goldberg Financial Services in Suffern, N.Y. "Every small piece of potentially bad news is being exaggerated and mentally being fast-forwarded to the worst-case scenario."
European Union leaders warned Tuesday that the continent's economy would stagnate unless governments make major reforms to promote growth. The problem is, though, that large debts in some countries make it difficult to implement stimulus measures to rally economies.
The euro approached a four-year low, which it set last week. The euro dropped to $1.2218, bringing it within a penny of the low of $1.2146 it touched last week.
Traders have been heavily selling the euro in recent weeks because of uneasiness over whether steep budget cuts in countries like Greece, Spain and Portugal will drag down an economic recovery on the continent. Italy was set to become the latest European nation to announce spending cuts to reduce its deficit.
Markets were also hurt by reports that North Korean leader Kim Jong Il ordered his military to combat alert because of rising tensions on the Korean peninsula. Major indexes in Japan and Hong Kong fell more than 3 percent.
The Standard & Poor's 500 index fell 22.74, or 2.1 percent, to 1,050.91, while the Nasdaq composite index dropped 53.10, or 2.4 percent, to 2,160.45.
The S&P touched its lowest level of the year earlier in the day, dropping to 1,040.78.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.15 percent from 3.20 percent late Monday. It fell as low as 3.07 percent, its lowest level since April 2009.
The yield on the 30-year bond briefly fell below 4 percent for the first time since October, before rising slightly. It is down to 4.04 percent from 4.08 percent late Monday.
Britain's FTSE 100 dropped 2.8 percent, Germany's DAX index tumbled 2.9 percent, and France's CAC-40 plummeted 3.8 percent. Japan's Nikkei stock average fell 3.1 percent.
Tuesday's sell-off follows a sharp, late-session drop Monday. The Dow lost 80 points in the last 15 minutes of trading Monday to close down nearly 127.
Investors were also concerned about a bill in Congress that will overhaul financial regulation. The Senate and House are reconciling their separate versions of the proposed reform.
Investors shrugged off a better-than-expected report on existing home sales from April. Such upbeat economic reports had helped push stocks consistently higher earlier in the year.
Oil fell $2.27 to $67.94 a barrel on the New York Mercantile Exchange.
http://finance.yahoo.com/news/Stocks-slide-on-further-apf-464459924.html?x=0
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