European markets follow Asia down

European markets follow Asia down

London: European stock markets opened sharply lower on Wednesday following overnight losses in Asia and Tuesday’s reversal on Wall Street amid spreading pessimism over corporate earnings around the world.

Britain’s FTSE 100 index of leading shares was down 128.26 points, or 3.0%, at 4,101.47, while Germany’s DAX was down 158.71 points, or 3.3%, at 4,625.70. The CAC-40 in France, Europe’s best-performing index on Tuesday, was 105.80 points, or 3.0%, lower at 3,369.60.

Europe’s losses echoed those in Asia. Japan’s Nikkei 225 stock average fell for the first time in three days, dropping 631.56 points, or 6.79%, to 8,674.69, while Hong Kong’s Hang Seng sank 5.2% and South Korea’s main index shed 5.1%.

On Wall Street, the Dow Jones index fell 2.5% to 9,033.66, while the technology-heavy Nasdaq composite index shed 4.1% to 1,696.68 as a host of companies such as chemical manufacturer DuPont Co., Sun Microsystems and Caterpillar Inc., downplayed their prospects for the coming months.

“Wall Street tumbled before the close last night and then with Yahoo! posting some poor Q3 numbers, this is certainly the sort of news that is setting the mood right now," said Matt Buckland, a dealer at CMC Markets.

Fears about the economic outlook around the world have become the markets’ primary concern as worries over the banking system have been assuaged, for now at least, by concerted government attempts to shore up banks, as well as massive liquidity boosts from the world’s leading central banks.

“The credit crunch seems to be behind us, and we are shifting focus to corporate earnings and economic conditions, and clearly both are deteriorating," said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong.

Commodity and oil stocks have been particularly hit in Europe. Mining company BHP Billiton PLC was down more than 6 percent after it warned of uncertain economic conditions in China, the main driver of global economic growth in recent years. Another major mining firm, Anglo American PLC, was also down over 4% following BHP’s warning.

Oil stocks were also weighed down by another $2.50 fall in oil prices to $69.67 a barrel despite expectations that the OPEC oil cartel will cut production later this week in an attempt to shore up prices, which have fallen by 50 percent in just three months.