US fears prompt further market slide
The London Stock Exchange fell 1.8 per cent
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Wednesday, 14, Mar 2007 11:17
Stocks in Asia and Europe fell again yesterday, continuing the latest global sell-off amid concerns about the health of the US mortgage market.
In London the FTSE 100 fell 110.4 points to close down 1.8 per cent on 6,050.8, following an earlier 2.9 per cent fall in Japan's Nikkei index.
Markets in Hong Kong, Malaysia, India and Australia also recorded falls of more than two per cent, while Wall Street was rocked by figures showing a significant rise in default levels for the US sub-prime mortgage market and weaker-than-expected retail sales figures.
New York's Dow Jones index was down by two per cent as the latest data showed that late mortgage payments and home repossessions in the sub-prime market were at their highest-ever level. This prompted fears that the current state of the industry, which provides home loans to those with poor credit histories, could cause a downturn in the US economy, the world's largest.
The latest global sell-off follows last month's dramatic slump in shares across the world, which saw £92 billion wiped off the value of the London Stock Exchange. Concerns that the Chinese government would introduce new regulations and a capital gains tax in a bid to slow the country's booming economy helped cause this slide.
Analysts remain cautious about global markets' outlook, given the latest fears about the health of the US economy.
"If the US subprime mortgage problems get worse, it could begin to hurt US consumers, and that would be very hurtful for exporters," said Kim Yung-min, a fund manager at SH Asset Management in Seoul.
"This month could be very bad," he added.
Nonetheless, others remain confident about the long-term outlook.
David Cohen of Action Economics said that the world economy appeared to remain on "an upward trajectory", adding that the latest sell-off was probably "a correction" following the strong advances witnessed across the globe during the previous few months.