Coordinated action fails to stabilise markets
World markets tumbled on Monday as central and international efforts towards stability thwarted once again
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Monday, 27, Oct 2008 08:19
World markets tumbled on Monday as central and international efforts to stabilise the global economy were thwarted once again.
Japan's Nikkei led the falls in Asia as it slumped 6.36 per cent to its lowest level for more than 25 years.
The falls prompted the country's central bank to cut interest rates, a move mirrored in South Korea, as markets in Hong Kong, China and Singapore all fell.
In London the FTSE 100 leading share index opened down almost five per cent as Gordon Brown prepared to defend his policy of increased borrowing and spending until the economy recovers.
Ahead of a speech on Monday morning, the prime minister said at the weekend that inflation was likely to fall in the coming months as oil prices subsided.
"Now inflation is actually coming down over the next few months and that will mean that it gives scope to all the monetary authorities, including the Bank of England, round the world to make a decision about interest rates," Mr Brown said.
The US Federal Reserve is also coming under pressure to cut interest rates further to complement commitments from the G7 and International Monetary Fund (IMF) to stabilise markets.
The IMF followed up a $2.1 billion loan to Iceland by pledging a $16.5 billion loan to Ukraine and a "substantial package" for Hungary, with Belarus and Pakistan next in line.
The G7 - Britain, Canada, France, Germany, Italy, Japan and the US – released a statement via the Japanese foreign ministry reaffirming a "shared interest in a strong and stable international financial system".
"We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability," the message said.
"We continue to monitor markets closely, and cooperate as appropriate."