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Dow Jones slips to 12-year low

03 March 2009 09:09 (UTC +04:00)

Baku. Vahab Rzayev - APA-Economics. World stock markets tumbled Monday, with benchmarks in Britain and Japan sinking 4 percent, as the worsening U.S. recession and more evidence of deep rot in the financial industry dashed hopes of a global recovery later this year.
Britain’s FTSE 100 sank to lows not seen since April 2003. The index fell to 3,653 before recovering slightly to be down 4.1 percent at 3,674.71.
"Today’s move to beneath the previous low raises the real prospect of another significant tumble, with 2003 lows of around 3,300 a popular target in the medium term," said David Jones, chief markets strategist at IG Index.
Germany’s DAX fell 2.6 percent to 3,744.15, and France’s CAC 40 lost 3.1 percent at 2,618.45.
Wall Street headed for another big drop, one that could hurl the Dow Jones industrials below 7,000, after American International Group Inc. posted the largest quarterly loss in U.S. corporate history. The Dow Jones industrial average has dropped for six consecutive months, and is worth less than half of its October 2007 record high of 14,164.53.
Ahead of the market’s open, Dow futures tumbled 1.7 percent to 6,922. Standard & Poor’s 500 index futures sank 1.8 percent to 717.80, while Nasdaq 100 index futures lost 1.6 percent at 1,095.50.
In Europe, HSBC PLC led the decline after it reported a 70 percent drop in 2008 net profit and said it would raise 12.5 billion pounds ($17.7 billion) in new capital through a share issue while cutting 6,100 jobs in the United States. Shares in Europe’s largest bank by market value plummeted 20 percent.
In Asia, Tokyo’s Nikkei 225 stock average dropped 3.8 percent to 7,280.15, while Hong Kong’s Hang Seng lost 3.9 percent to 12,317.46. Markets in Australia, Taiwan and Singapore shed about 3 percent or more, while South Korea’s Kospi plummeted 4.2 percent.
Investors are increasingly worried because mounting losses in the financial industry raise the prospect of greater government stakes and other capital-raising moves that can ultimately dilute shares and lower their price. Furthermore, lending markets are likely to remain comatose as long as banks are teetering, making it near impossible for the world economy to stage any meaningful rebound.
Oil prices weakened in European trade, with benchmark crude for April delivery down $1.18 at $43.58. Last week in the U.S., the contract fell 46 cents to settle at $44.76 a barrel on the New York Mercantile Exchange.