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Shares fall on US economy fears Shares fall on US economy fears
(40 minutes later)
Asian shares have fallen sharply in Wednesday trading, echoing overnight declines in the US due to renewed fears about the health of the US economy. Stocks have fallen in Wednesday trading, with Europe following Asian shares lower on renewed fears about the US economy.
Japan's main Nikkei 225 index closed down 4.7%, or 646 points, at 13,099, while Hong Kong's Hang Seng lost 5.4%. The UK's FTSE 100 index was down 18 points or 0.3% to 5,850 in initial exchanges, while Germany's Dax had lost 0.6%, and Paris' Cac had fallen 0.4%.
The spark for the latest market woe was data showing that the US service sector contracted in January for the first time in almost five years. Japan's main Nikkei 225 index had earlier closed down 4.7%.
Wall Street's main Dow Jones index ended Tuesday trading down 3%. The falls echo overnight declines on Wall Street following news that the US service sector is now contracting.
There's a real probability that both the US and Europe will go into recession at the same time Francis Lun, general manager at Fulbright Securities in Hong Kong America's main Dow Jones index ended Tuesday trading down 3%.
Both the Nasdaq and S&P indexes also lost 3%. Both the Nasdaq and S&P 500 indexes also lost 3%.
The UK's FTSE 100 had earlier finished Tuesday 2.6% lower.
'Bear market''Bear market'
"It's unbridled pessimism," said Francis Lun, general manager at Fulbright Securities in Hong Kong."It's unbridled pessimism," said Francis Lun, general manager at Fulbright Securities in Hong Kong.
There's a real probability that both the US and Europe will go into recession at the same time Francis Lun, general manager at Fulbright Securities in Hong Kong
"Everyone is concentrating on a US recession, but Europe is also looking bad. We are in for a bear market now.""Everyone is concentrating on a US recession, but Europe is also looking bad. We are in for a bear market now."
The weak US service sector data came from the Institute of Supply Management's index of business activity in the non-manufacturing sector.The weak US service sector data came from the Institute of Supply Management's index of business activity in the non-manufacturing sector.
Its latest reading came in at 41.9, with any number below 50 indicating contraction. Its January reading came in at 41.9, the first recorded monthly contraction in almost five years.
Economists had forecast a milder decrease to 53. With any number above 50 indicating growth, economists had forecast a milder decrease to 53 from 54.4 in December.
"There's a real probability that both the US and Europe will go into recession at the same time," added Mr Lun."There's a real probability that both the US and Europe will go into recession at the same time," added Mr Lun.
"It's a financial mess on the two continents with the sub-prime crisis and the SocGen debacle.""It's a financial mess on the two continents with the sub-prime crisis and the SocGen debacle."