Banking stocks lead world markets down again
LONDON -- World stock markets fell Monday, with Japan's benchmark tumbling to a 26-year closing low, amid ongoing concerns about the length and depth of the global economic downturn and renewed fears about the financial industry following news the British government was taking a majority stake in another bank.
Those concerns were stoked over the weekend by the World Bank's forecast that the global economy will shrink this year for the first time since World War II and the British government's confirmation that it was taking a majority stake in Lloyds Banking Group PLC in exchange for insuring potentially more than 260 billion pounds ($367 billion dollars) of shaky assets.
In Europe, Germany's DAX fell 58.58 points, or 1.6 percent, to 3,607.83, while France's CAC-40 was down 55.78 points, or 2.2 percent, at 2,479.67.
Meanwhile, the FTSE 100 index of British shares was down 65.84 points, or 1.9 percent, at a fresh six-year low of 3,464.89, with the banks hit hard by the weekend's developments in Lloyds. The bank saw its shares tumble around 8 percent, while Barclays PLC and HSBC PLC slid 10 percent and 9 percent respectively.
Some support to the FTSE was provided by heavyweight oil stocks BP PLC and Royal Dutch Shell, which were in demand after another rise in the oil price towards $50 a barrel ahead of an anticipated production cut from OPEC.
Earlier in Asia, Japanese shares, already among Asia's worst performing this year, fell sharply on the news that the world's second-largest economy posted a record current-account deficit in January, its first in 13 years.
Japan's Nikkei 225 stock average fell 87.07 points, or 1.2 percent, to 7,086.03, and Hong Kong's Hang Seng tumbled 576.94, or 4.8 percent, to 11,344.58 on the coattails of HSBC, a huge component in the index.
Also weighing on Hong Kong were steep falls in mainland markets, where investors booked some profits after the government didn't announce new and bigger policies to stimulate the economy at an ongoing legislative meeting.
"Sentiment is terrible," said Ben Pedley, managing director of LGT Investment Management Ltd. in Hong Kong. "We're going to be in a funk, not only in Asia, but in the rest of the world for the next year or two."
Sentiment was not expected to improve at Wall Street's open, with Dow futures down 105 points, or 1.6 percent, at 6,569 and the broader Standard & Poor's 500 futures 10.9 points, or 1.6 percent, lower at 676.90.
On Friday, U.S. stocks enjoyed a last hour rally, helping the Dow to end up in positive territory, despite the news that the U.S. economy shed another 651,000 jobs in February alone and the country's unemployment rate crept up above 8 percent.
"The volatility we saw last week could make it difficult to instill any great confidence in traders, something that arguably will also require an improvement in the fundamentals too which still remain in a rather depressed state," said Matt Buckland, a dealer at CMC Markets.
Elsewhere in Asia, Shanghai's benchmark plummeted 3.4 percent, while stock measures in India, Singapore and Taiwan also fell. However, those in South Korea and Australia gained 1.6 percent and 0.3 percent respectively.
In the oil market, benchmark crude for April delivery rose 29 cents to $45.81 a barrel as investors anticipated another OPEC production cut.
The dollar rose 0.6 percent to 98.96 yen while the euro fell 0.5 percent to $1.2587.