Global stocks plunge to new depths ( 56 Views )

1. GLOBAL stocks plunged to new depths in the financial vortex today with London shares down nearly 6.0 per cent after the Tokyo market came unhinged with its worst fall for more than 20 years. London briefly slumped more than 7 per cent in early trading, despite the British Government announcing a part-nationalisation of the country's eight main banks in a broader bailout package worth up to $US875 billion ($1.23 trillion). The British Government said it would use £50 billion ($23.5bn) of taxpayers' money to buy major stakes in the banks, which include Royal Bank of Scotland, HSBC and Barclays. The three-part package also makes available £200 billion in short-term loans and the Government will issue £250 billion to guarantee loans between banks. "These sorts of measures aren't working anymore," said Hiroichi Nishi, a broker at Nikko Cordial. "It's like you're trying to pump blood into a heart with clogged arteries." From Hong Kong to Paris, Singapore to Frankfurt, investors dumped shares as fears grew that policymakers may be powerless to stop the worst global financial shock since the Great Depression.
   
   "Equity market retrenchment continues with stocks being sold off on a global basis," said CMC Markets dealer Matt Buckland. In a dramatic day on fear-stricken markets, Tokyo plummeted 9.38 per cent by the close, the biggest loss since October 1987 in the wake of the "Black Monday" crash in the US. Hong Kong ended down 8.2 per cent at its lowest level in more than two years. The bloodbath forced some countries to take dramatic steps to try to stem the selling. Indonesia suspended trading on its market after stocks plunged more than 10 per cent. Trading was later frozen on Russia's two main stock markets after plunges of more than 11 per cent on opening. Elsewhere in early European trade, London recovered slightly to post a loss of 5.58 per cent, Frankfurt lost 6.72 per cent, Paris dived 8.18 per cent and Madrid tumbled 5.41 per cent. "No one wants to take risks right now," said Hirokazu Fujiki, a strategist with Okasan Securities. "There's no near-term bottom in sight." He said the market was "pressuring monetary authorities to take co-ordinated action, notably joint interest rate cuts", ahead of a meeting of top world finance chiefs in Washington on Friday. Sydney closed down 5.0 per cent today, Seoul lost 5.81 per cent and Shanghai shed 3.04 per cent as the crisis sparked by a US housing slump continued to send shockwaves around the globe. The latest plunge came after Wall Street's Dow Jones Industrial Average sank more than 500 points or 5 per cent yesterday to a five-year closing low.
   
   In foreign exchange trading, the US dollar slumped below ¥100 for the first time in six months as investors flocked to the Japanese currency as a haven. "No one knows for certain now what they can rely on," said Hironobu Hagi, deputy general manager at capital market division of Shinsei Bank. "We're seeing panic selling. Once players see a sign of selling, everybody tries to jump on the bandwagon," he said. Global central banks, meanwhile, pumped billions of extra dollars into the financial system while the Hong Kong Monetary Authority said it would cut its key interest rate by 100 basis points from tomorrow. The Bank of England was beginning its latest monthly policy meeting, with markets widely expecting a cut to British interest rates of at least quarter of a percentage point tomorrow. The US Federal Reserve yesterday said that it would buy up short-term commercial paper or company debt in an effort to kick-start credit flows and fight off the liquidity crunch triggered by a wave of US mortgage defaults. But markets took little comfort from the latest measures. Wall Street's Dow Jones index sank 5.11 per cent to a five-year closing low yesterday. Federal Reserve chairman Ben Bernanke hinted that there could be a US interest rate cut soon as the outlook for economic growth worsened. "In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate," Mr Bernanke said. In the Middle East, stock markets plunged again today, with Riyadh down more than 7.5 per cent ahead of the close.
   
   (levent, Turkey)

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