Asian stocks sink after Dow plunges By TOBY ANDERSON,
AP Business Writer
Wed Feb 6, 7:17 AM ET
LONDON - European stocks shrugged off sharp
drops in Asian markets Wednesday after a tumble on Wall Street
fanned investor fears that a U.S. recession would sap demand
for Asian exports.
U.S. futures rose ahead of the start of trading
in New York.
In Europe, stocks were up modestly. In the
U.K., the benchmark FTSE 100 Index rose 0.1 percent to 5,873.5,
while Germany's DAX climbed 0.3 percent to 6,782.91. France's
CAC gained 0.5 percent to 4,799.2, helped by a strong earnings
report by France Telecom.
In Asia investors dumped shares after figures
released Tuesday showed the U.S. service sector shrank last
month for the first time since March 2003. That wiped out
some renewed confidence about the American economy after the
U.S. Federal Reserve's two big rate cuts late last month.
"It's unbridled pessimism," Francis
Lun, general manager at Fulbright Securities Ltd. in Hong
Kong said of the Asian markets.
In Hong Kong, the benchmark Hang Seng index
plunged 1,339.24 points, or 5.4 percent, to close the half-day
session at 23,469.46. Japan's Nikkei 225 tumbled 4.7 percent
to 13,099.24.
Global financial markets have been turbulent
since the start of the year on worries about a U.S.
and worldwide slowdown and massive losses racked up
by banks that made bad bets on securities backed by risky
mortgages.
While the Fed's rate cuts lifted many markets
last week, investor confidence evaporated after the Institute
for Supply Management reported that its December index of
activity in the U.S. service sector, which accounts for about
two-thirds of the economy there, dropped below 50, indicating
contraction. The Dow Jones industrial average plunged 2.93
percent, its largest one-day percentage drop since Feb. 27,
2007.
Early Wednesday, Standard & Poor's 500
futures rose 4.1 points to 1,347.30 and Nasdaq 100 futures
added 2.5 points to 1,787.50, while Dow industrial futures
added 29 points.
The financial industry, already reeling from
losses linked to the credit crisis, was dealt another blow
last month when major French bank Societe Generale said it
had lost 4.8 billion euros ($7.1 billion) in cleaning up unauthorized
transactions by a rogue trader.
Elsewhere in the Asia-Pacific, Australia's
key index fell 3.2 percent, while India's Sensex dropped nearly
3 percent. Thailand's market slid 1.6 percent.
Some traders said Wednesday's decline in Hong
Kong was overdone and largely driven by investors keen to
avoid risky exposure during the long Lunar New Year holidays.
Markets in Hong Kong and Singapore were closed Wednesday afternoon
and would remain shut Thursday and Friday.
Markets in China, South Korea and Taiwan were
closed Wednesday through Friday for the Lunar New Year holidays.