Europe markets follow Asia down on economic fears

Europe markets follow Asia down on economic fears

London: Europe’s stock markets opened lower on Tuesday following losses in Asia amid mounting concerns about the world economy following downbeat corporate news in the US.

The FTSE 100 index of leading British shares was down 70.43 points, or 1.6%, at 4,333.49, while Germany’s DAX was 101.08 points, or 2.0%, lower at 4,924,45. France’s CAC-40 index was 67.87 points, or 1.9%, lower at 3,437.88.

Earlier, Tokyo’s Nikkei 225 index dropped 272.13 points, or 3%, to 8,809.30, while the Hang Seng benchmark in Hong Kong lost 703.73 points, or 4.8%, to 14,040.90.

Analysts blamed the latest bout of selling on fears that the economic recession in the US will be deeper than anticipated and could lead to some high-profile casualties. Electronics retailer Circuit City Stores Inc. was the latest company in the US to report mounting difficulties as it filed for bankruptcy protection.

Investors are also speculating about the fate of automakers General Motors Corp., Chrysler and Ford Motor Co. after the automakers met with lawmakers last week in hopes of securing financial help. Shares of GM, which announced a $2.5 billion third-quarter loss on Friday and warned that it could run out of cash next year, plunged 23% overnight to levels not seen since shortly after World War II.

Those fears are weighing on Wall Street too, where the Dow Jones index closed Monday down 73.27, or 0.8%, at 8,870.54, after rising by 215 points in early trading.

A further sell-off is anticipated at the opening bell as Dow futures were down 59 points, or 0.7%, at 8,828. Trading in the US though is expected to be modest as the bond market is on holiday for Veterans’ Day.

Worries about the global economy are taking their toll on oil prices and energy stocks too. By early morning London time, the cost of a barrel of oil was down $1.60 cents at $60.81, fueling further selling pressure of heavyweights BP PLC and Royal Dutch Shell, both down nearly 3%.

In Europe, financial stocks were doing particularly badly with Swiss bank UBS AG down 6% and Deutsche Bank 4% lower, and Allianz nearly 6% down.