Recession fears stalk world markets
TOKYO: Fears of a deep global recession sparked sharp falls in Asian markets Friday after a Wall Street slide, as the International Monetary Fund warned that advanced economies would contract next year.The IMF called for government spending to battle the financial crisis, but markets also took fright at an unprecedented British interest rate cut of 1.5 percentage points and a slew of gloomy profit forecasts.Tokyo’’s Nikkei stock index tumbled 4.35 percent by lunch after dropping as much as seven percent at one point following a profit warning from Toyota. Hong Kong share prices opened 3.8 percent down, Sydney lost 4.1 percent and Singapore dropped 4.5 percent.South Korea cut its benchmark seven-day repo rate for the third time in a month by a quarter of a point to 4.0 percent, its lowest level since February 2006, as it tries to stimulate its export-driven economy. The Bank of England slashed its key lending rate by a record 1.5 percentage points to 3.0 percent Thursday, while the European Central Bank cut its main lending rate by half a percentage point to 3.25 percent.Normally, a reduction in borrowing rates would be a strong buy signal but markets were suspicious about the need for such drastic action, especially in Britain, believing the economy must be seriously at risk, dealers said. The dollar fell to 97.12 yen in Tokyo morning trade, down from 97.72 in New York late Thursday. The euro dropped to 1.2674 dollars from 1.2713.”Investors are worried that things are going to get worse, and that the financial system and the economy are unlikely to get back to normal any time soon,” said Masatsugu Miyata, chief forex dealer at Hachijuni Bank.US stocks had tumbled for a second day in a row Thursday as the euphoria of Barack Obama’’s presidential election victory Tuesday dissipated in the face of the brutal financial crisis.
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