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Global stocks see sharp declines Global stocks see sharp declines
(about 1 hour later)
European shares have fallen sharply in early trading, mirroring earlier falls in East Asia as investors' worries about the US economy continue.European shares have fallen sharply in early trading, mirroring earlier falls in East Asia as investors' worries about the US economy continue.
London's FTSE 100 index was down 100 points, or 1.5%, to 6,432 in initial exchanges, while Frankfurt's Dax lost 1.4% and Paris' Cac fell 1.6%.London's FTSE 100 index was down 100 points, or 1.5%, to 6,432 in initial exchanges, while Frankfurt's Dax lost 1.4% and Paris' Cac fell 1.6%.
Earlier, Tokyo's Nikkei index had closed 2.2% lower.Earlier, Tokyo's Nikkei index had closed 2.2% lower.
European and East Asian markets were responding to heavy falls on Wall Street on Friday.European and East Asian markets were responding to heavy falls on Wall Street on Friday.
'Pretty ugly' Caterpillar warning
The Dow Jones, the main US share index, fell 367 points on Friday, the 20th anniversary of the Black Monday stock market crash.The Dow Jones, the main US share index, fell 367 points on Friday, the 20th anniversary of the Black Monday stock market crash.
I'd like to laugh except it hurts Trader Andy Brooks Friday's slump on Wall Street is going to dominate market sentiment as the new trading week gets under way Matt Buckland, a trader with CMC Markets
The falls were set off by concerns that the full effects of the US housing slowdown have not yet been seen.The falls were set off by concerns that the full effects of the US housing slowdown have not yet been seen.
It started when the building equipment firm Caterpillar cut its profit forecast, blaming the state of the economy.It started when the building equipment firm Caterpillar cut its profit forecast, blaming the state of the economy.
"It's pretty ugly," said Bill Strazzullo, chief market strategist at Bell Curve Trading. Caterpillar added that the US economy will be "near to, or even in, recession" next year.
"A company like Caterpillar should be a poster child for global growth and benefits of the weak dollar," he said. "Friday's slump on Wall Street is going to dominate market sentiment as the new trading week gets under way," said Matt Buckland, a trader in London with CMC Markets.
"It makes you question: Is global growth really that strong? Has the earnings kick from the weak dollar played itself out?" "Obviously there's speculation that we may see a repeat of the losses from Black Monday some 20 years ago, and with little economic data being scheduled for release, it's going to be sentiment rather than the fundamentals that provide the bulk of the direction."
On Black Monday, the Dow Jones fell 23%, which nowadays would mean a drop of more than 3,000 points. On Black Monday in 1987, the Dow Jones fell 23%, which nowadays would mean a drop of more than 3,000 points.
"I think we're responding emotionally to the 20th anniversary of the October 1987 stock market crash," said Andy Brooks, head of trading at T Rowe Price.
"I'd like to laugh except it hurts," he added.