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Asian stocks tumble as bad news stacks up

TOKYO: Asian stocks plunged today, dragged down by heavy losses on Wall Street after the US government dropped a plan to buy up toxic mortgage assets and new signs of recession emerged in Europe.

A profit warning from the biggest US consumer electronics retailer, Best Buy, also sapped confidence, which was already fragile following weeks of market turmoil sparked by a global credit crunch.

“The announcement by Best Buy fuelled worries over corporate earnings when consumers are heading to the year-end shopping season,” said Motoki Ichikawa, investment information chief at SMBC Friend Securities.

Washington’s U-turn on the financial bailout plan “also came out of the blue, discouraging investors,” he said.
Stocks tumbled 5.1 per cent in Tokyo by lunch as Hong Kong shares sank 6.5 per cent in early trade. Seoul slumped 5.6 per cent while Sydney was 4.1 per cent in the red.

Elsewhere, the Philippines was 1.6 per cent lower in morning trade, China shed 1.73 per cent and Singapore down 2.49 per cent.

Markets around the region were mired in losses after Wall Street’s Dow Jones Industrial Average sank 4.73 per cent yesterday after a raft of gloomy corporate news and the shift in the bailout strategy.

“It looks like world markets will take another leg down in the next few days,” Goldman Sachs JB Were senior sales trader Patrick Crabb in Melbourne said.

“We passed through the eye of the hurricane, and are now back feeling the full force of the storm.”

China, meanwhile, reported a sharp slowdown in industrial production growth — the latest sign that the Asian economic powerhouse is losing steam.

Premier Wen Jiabao was quoted in the state media as saying the impact of the global financial woes on China’s economy was “worse than expected.”

European stock markets dropped yesterday, as the Bank of England said the British economy was likely in recession.

In Germany, the eurozone’s largest economy, a panel of top economists warned that economic growth would grind to a halt in 2009.

The London FTSE 100 index fell 1.52 per cent, the Paris CAC 40 fell 3.07 per cent and the Frankfurt Dax dropped 2.96 per cent. - AFP



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