Asian markets plunged during Monday trading and European stocks opened on the same downward slope, as global investors took scant comfort from Washington's passage of a $700 billion bank bailout and focused instead on deepening financial turmoil in Europe that threatens to slow global growth.
Japan's stock market sank to its lowest finish in 4 1/2 years as worries about growing fallout from the credit crisis overwhelmed any relief over passage of the U.S. bailout.
The benchmark Nikkei 225 index lost 465.05 points, or 4.25 percent, to close at 10,473.09 - its lowest finish since February 2004.
Traders were spooked by Germany's announcement Sunday of a new bailout package totaling 50 billion euros ($69 billion) for Hypo Real Estate, the country's second-biggest commercial property lender, part of a scramble by European governments to save failing banks.
Adding to European uncertainty, leaders failed to unite at a weekend summit on a joint approach to shore up confidence in the markets - a show of unity pleaded for by French President Nicolas Sarkozy.
Despite her earlier and vocal support for such a pan-European approach, German Chancellor Angela Merkel reportedly announced that Germany's government would guarantee all deposits in the nation's banks.
That bold, unilateral approach, first adopted by Ireland last week, frustrated other European leaders Monday morning, bringing pressure on them to institute similar, costly guarantees - or risk a mass-flight of investors.
Alistair Darling, Britain's treasury chief, was reportedly considering a similar plan to guarantee Britons' savings Monday morning. Darling said he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch.
Britain's treasury issued a statement Monday morning saying it was seeking "further clarification" on Merkel's plan to underwrite German deposits.
Amid the uncertainty, London's FTSE exchange dropped nearly 5 percent just minutes after opening.
In Austria, shares on the Vienna Stock Exchange plunged 8.4 percent in early trading, and officials said it was the deepest drop since May 2005.
Vienna's benchmark ATK index fell 237.3 points to 2,579.25 at the opening bell. The nosedive at one of Europe's smaller stock exchanges showed how the global economic crisis was rattling markets big and small.
Austria's government has been pressing to increase the mandatory minimum euro20,000 (US$27,545) insurance on bank deposits.
Russia's stock markets also fell precipitously in early trading, with the benchmark index of the RTS exchange down more than 7 percent in the first 20 minutes. The index of the MICEX exchange took an even steeper dive, down 9.6 percent on Monday morning.
Russia's stock market in recent years had boomed amid high prices for oil and natural gas. But the market began falling sharply in midsummer amid concerns about government interference with businesses, and the drop accelerated as the global economic crisis intensified.
A dismal report on the U.S. job market released Friday added to the gloom in Asian markets, fanning worries about U.S. consumer demand for the region's exports.
Apart from a credit crunch in Europe, investors are quite concerned about the worsening outlook on the U.S. economy.
Alex Tang, Core Pacific-Yamaichi
Hong Kong's Hang Seng index slid 3.4 percent to 17,089. Markets in mainland China, Australia, South Korea, India, Singapore and Thailand also fell sharply. Indonesia's key index plunged more than 5 percent.
"This credit crunch looks like it's not going away any time soon," said Alex Tang, head of research at brokerage Core Pacific-Yamaichi in Hong Kong. "Apart from a credit crunch in Europe, investors are quite concerned about the worsening outlook on the U.S. economy."
"We haven't seen any positive developments in Europe or the U.S., apart from the rescue plan," Tang said. "But even with the rescue plan, investors are focused on the slowing economy."
Investors were processing a series of developments out of Europe over the weekend. Belgian Prime Minister Yves Leterme said Sunday that France's BNP Paribas SA had committed to taking a 75-percent stake in troubled European bank Fortis NV.
The outlook for the U.S. economy worsened after figures released Friday showed that 159,000 jobs in the U.S. were lost last month, the fastest pace in more than five years.
Economists were also predicting many more months of bank failures in the United States, suggesting the $700 billion bailout would help control the losses, but the banking industry enfeebled by huge losses on risky home loans was still on very shaky ground. (Read more analysis of banking industry's blues.)
Such concerns overshadowed any investor optimism over the U.S. House of Representatives' approval Friday of a massive bailout plan that will allow the U.S. government to buy distressed mortgages and securities backed by mortgages from banks and other financial institutions.
Investors questioned how long it would take for the package to unfreeze credit markets, restore bank lending and generally shore up the U.S. economy.
"The market had already figured in the package's passage," said Yukio Takahashi at Shinko Securities Co. in Tokyo. "There are strong doubts about its implementation."
U.S. stock index futures were down more than 1 percent, suggesting Wall Street would open lower Monday morning. The Dow Jones industrial average fell 157.47, or 1.5 percent, to 10,325.38 on Friday.
Photo: An investor reacts as he watches a display showing stock prices at a brokerage firm in Hong Kong, Oct. 6, 2008. (AP Photo/Vincent Yu)
Buzz Report: Porn is better than horns
YouTube tries to spice down its image by removing even partial nudity and adding a symphony contest. Good luck with that!
Education Minute 12/04
WWJ's Pat Vitale gives education tips beyond the classroom. A joint production of Eastern Michigan University-Education First! and WWJ.
Buzz Out Loud 865: Solidarity, my ape-hands brother
Tom and Jason have an ape-like bonding moment on today's show, Brian Tong calls "bull" on rumors of a $99 iPhone 3G, we find out that Google went right up against the DOJ deadline before it finally yelled "chicken" and walked away from its ad deal with Ya
WWJ Newsradio 950 is Detroit's only all-news radio station and is the leader in Detroit radio news. Listen online to WWJ-AM 950 for live, local Detroit news, up-to-the-minute Detroit traffic, Detroit sports, Detroit business and Detroit community information. WWJ Newsradio 950 is an award winning radio station and you can listen online and podcast on demand Detroit news, Detroit Construction Alerts, Detroit School Closings, Winter Survival Guide and learn more about our Business Breakfasts. www.wwj.com.
Apart from a credit crunch in Europe, investors are quite concerned about the worsening outlook on the U.S. economy.
