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Woes continue among global stocks Angst returns to global markets
(about 7 hours later)
Global shares have fallen again as concerns about world credit conditions - driven by problems in the US mortgage sector - continue to worry investors. Global stocks have fallen back as concerns about world credit conditions, driven by problems in the US mortgage sector, continue to worry investors.
London's FTSE 100 fell 1% to 6,082 points in early trading, while Japan's Nikkei-225 index dropped 2.2% to finish at its lowest close in eight months. Shares on Wall Street opened lower, with the Dow Jones index falling 0.4% to 12,971.2 and the Nasdaq shedding 0.3% by 1445 BST.
On Tuesday, the Dow Jones lost 1.6% to 13,029 points and the Nasdaq fell 1.7%. Even news of just a mild inflation rise failed to pacify investors, still anxious about a credit crunch.
The falls came despite the Federal Reserve saying it would inject more funds into financial markets if needed. Meanwhile, London's FTSE 100 was trading down 1.6% to 6,047.7 points.
To ease fears over available credit, sparked by the downturn in the mortgage sector, the Fed has already pumped billions of dollars of emergency funds into the banking system in recent days - twice on Friday and again on Monday. Fund injection
The movement of the Dow Jones below the psychologically important 13,000-point barrier came despite US labour department data showing that the Consumer Price Index (CPI), the key measure of inflation, recorded just a small increase of 0.1% in July.
And Tuesday's comments from the Federal Reserve, that it would inject more funds into financial markets if needed, also failed to stem the sell-off. To ease fears over available credit, sparked by the downturn in the mortgage sector, the Fed has already pumped billions of dollars of emergency funds into the banking system in recent days - twice on Friday and again on Monday.
The European Central Bank (ECB) and the Bank of Japan have made similar moves.The European Central Bank (ECB) and the Bank of Japan have made similar moves.
'Watching carefully' Worries about a slowdown in US consumption have been driven by retail giant Wal-Mart lowering its profit forecast, after saying that its customers were straining under economic pressures such as high oil prices.
Worries about a slowdown in US consumption were driven by retail giant Wal-Mart lowering its profit forecast, after saying that its customers were straining under economic pressures such as high oil prices. Its shares fell 5.1% And department store Macy's has said that the "difficult" climate had seen its quarterly profits down 77%.
Also down sharply was another retailer, Home Depot, which lost 4.9% after warning that its profits would fall this year as a result of the sluggish housing market. High-risk woes
Earlier Japan's Nikkei-225 index dropped 2.2% to finish at its lowest close in eight months.
Concern over the strength of US spending, and its impact on Asian exporters, meant that the Nikkei ended the day down 369 points at 16,475.61, its lowest level since December 2006.Concern over the strength of US spending, and its impact on Asian exporters, meant that the Nikkei ended the day down 369 points at 16,475.61, its lowest level since December 2006.
In Hong Kong the Hang Seng was down 3%, while in early morning trade in Europe France's Cac 40 index lost 1.3% and Germany's Dax index slipped 0.3%. In Hong Kong the Hang Seng closed down 2.9%, while in Europe France's Cac 40 index had lost 1.6% and Germany's Dax index slipped 0.6%.
Japanese Prime Minister Shinzo Abe said that despite the fall in share prices, the economy was still solid.
"I think the Japanese economy has remained strong but I will be watching it carefully," he said.
Recent financial market volatility has been triggered by the US sub-prime mortgage sector, which offers higher-risk loans to people with a poor credit history.Recent financial market volatility has been triggered by the US sub-prime mortgage sector, which offers higher-risk loans to people with a poor credit history.
As US interest rates have risen and the housing bubble has burst, a growing number of sub-prime borrowers have defaulted on their loans prompting extensive financial difficulties for a number of investment funds with heavy exposure to the sector - and triggering fears of a wider financial crisis.As US interest rates have risen and the housing bubble has burst, a growing number of sub-prime borrowers have defaulted on their loans prompting extensive financial difficulties for a number of investment funds with heavy exposure to the sector - and triggering fears of a wider financial crisis.
While some estimates say $300bn in loans could be at risk, one of the biggest worries for investors is not knowing the eventual scale of the problem.While some estimates say $300bn in loans could be at risk, one of the biggest worries for investors is not knowing the eventual scale of the problem.