| GEO Business | | Global stock markets tumble | Updated at: 2033 PST, Friday, December 12, 2008
NEW YORK: Global stock markets tumbled on Friday as fears mounted of a collapse of the Big Three US automakers after the US Senate refused to throw them a financial lifeline, traders said.
Share prices plunged in Asia and in morning European trade after hours of late-night negotiations among US senators on a bailout of the troubled industry collapsed.
The dollar in turn fell sharply, hitting a 13-year low against the yen.
"It's a very bad sign. US stocks will likely nosedive," said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC. Wall Street will reopen at 1430 GMT after losing 2.24 percent on Thursday.
Tokyo's Nikkei index slumped by more than seven percent at one point as the dollar tumbled below the key 90 yen level for the first time since 1995.
The Japanese benchmark ended down 5.6 percent as exporters reeled from the stronger yen, which undercuts their overseas earnings.
Hong Kong shares closed down 5.48 percent, Seoul dived 4.38 percent and Sydney was off 2.4 percent.
In morning European trade, London dived 3.32 percent, Frankfurt tumbled 4.26 percent, Paris plunged more than 5.0 percent, Madrid shed 3.84 percent and Zurich lost 3.12 percent.
"The buying we saw early this week has quickly run out of steam and with the US automaker bailout failing in the Senate overnight, the consequences for the market are looking increasingly dire," said City Index market strategist Joshua Raymond.
The 14-billion-dollar deal passed the House of Representatives this week but it faced stiff opposition from senators in US President George W. Bush's Republican Party.
"I'm terribly disappointed that we are not able to arrive at a conclusion," said Senate Majority Leader Harry Reid, a member of president-elect Barack Obama's Democratic Party.
"We have tried very, very hard to arrive at a point where we could legislate for the automobile industry."
Japan meanwhile announced, after the close Friday, another major stimulus package worth 255 billion dollars Friday to add to the 300 billion dollars already earmarked to get the world's second largest economy moving again.
Investors reacted cautiously earlier to reports about the impending announcement, noting that Prime Minister Taro Aso -- who unveiled a 26.9-trillion-yen boost in late October -- is struggling amid voter discontent with his handling of the economy.
Aso "is already a lame duck," said Hideaki Higashi, a strategist at SMBC Friend Securities, before the announcement. "We do not know how seriously we should believe the reported measures will be implemented."
In New York on Thursday, the Dow Jones Industrial Average slid 2.24 percent as investors fretted over the rescue plan for the troubled US auto industry.
Market nervousness was reinforced by news that US jobless claims in the past week soared to a fresh 26-year high of 573,000, well above expectations.
There was also disappointment that the trade deficit widened 1.1 percent in October to 57.2 billion dollars, with both exports and imports down, suggesting demand is falling worldwide.
The sharp drop on Asian markets wiped out several days of gains. Japan's Nikkei index is now down 46.5 percent in 2008 while Hong Kong's Hang Seng is off almost 48 percent.
Elsewhere in the Asia-Pacific Friday, Taipei ended down 3.7 percent, Wellington lost 1.8 percent and Manila dropped 2.0 percent.
"Investors used the botched US auto bailout deal as an excuse to pocket the recent gains," Taiwan International Securities analyst Arch Shih said. |  |
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