World markets tumble as dollar slides
- Asia stocks down, Europe opens lower as U.S. dollar hits 12-year low against yen
- Japan's Nikkei 225 falls 3.3 percent; Hong Kong Hang Seng plunges 4.8 percent
- UK FTSE 100 drops 1.9 percent; Paris, Frankfurt indices down more than 2 percent
BANGKOK, Thailand (AP) -- European and Asian markets fell Thursday after Wall Street's retreat from its biggest rally in five years, with investors worried by the sliding dollar and ongoing troubles in the U.S. economy.
An investor watches the markets at Malaysia's stock exchange in Kuala Lumpur.
In Europe, the U.K's benchmark FTSE 100 index dropped 1.9 percent to 5,667.5, while Germany's DAX slipped 2.4 percent to 6,443.59. In France the CAC declined 2.5 percent to 4,579.56.
"U.S. dollar lows as well as record high oil prices are ... adding to woes as the market begins to head south following strong gains at the start the week," said Nick Mitchell, a dealer at CMC Markets in London.
"Sentiment has also been hit today by the dollar falling below 100 yen for the first time since 1995."
Traders were disheartened by an overnight drop on Wall Street, where the Dow Jones industrial average slipped 0.4 percent Wednesday after surging 3.55 percent Tuesday.
U.S. stock index futures were also down ahead of Thursday's open. Dow futures were down 164 points, or 1.4 percent, to 11,959, while the Standard & Poor's 500 index futures were down 19.8 points, or 1.5 percent, to 1,289.6.
In Asia the dollar's drop to a 12-year low against the yen hammered stocks of Japanese exporters such as Toyota and Sony. The Nikkei 225 index tumbled 3.3 percent to 12,433.4, its lowest in 21/2 years.
In late Tokyo trading, the dollar fell below 100 yen for the first time since 1995, sinking as low as 99.75 yen.
Asian markets, which had rallied Wednesday on news of the U.S. Federal Reserve's $200 billion relief plan for tight credit markets, resumed their slide amid skepticism that the move will prevent a U.S. recession.
"This is just an extremely nervous market given the uncertainties overhanging the outlook for the world," said David Cohen, a regional economist with Action Economics in Singapore.
"The clouds are the combination of the oil prices, the nervousness about the U.S. slipping into recession and dragging down the global economy and ... the turmoil in the credit markets that doesn't want to go away."
In Hong Kong, the Hang Seng Index fell 4.8 percent to 22,301.6. Benchmark indices fell more than 2 percent in Australia, China, Malaysia, South Korea and Taiwan, while markets in India and Indonesia lost more than 4 percent.
While many investors regard the Fed's plan to lend Treasuries in exchange for debt tied to mortgages as a positive step, they are hesitant to pour more money into stocks without signs the U.S. economy is reviving.
"People are still very unsure whether or not it will work. One day they rally on it, the next day they're wary whether it will do the trick," said Cohen.
In Tokyo, traders were alarmed by the yen's recent surge against the dollar, which erodes overseas earnings at the country's key exporters. Toyota Motor Corp. and Honda Motor Co. fell 3 percent and 4.2 percent respectively. Sony Corp. shares sank 4 percent.
Japanese financial shares were also hit hard, with Mizuho Financial Group and Mitsubishi UFJ Financial Group each dropping 6.8 percent, and Sumitomo Mitsui Financial Group skidding 7.3 percent.
Meanwhile, commodity-related stocks rose, sidestepping the overall market decline as crude futures traded near the overnight record high. Inpex Holdings rose 5.1 percent and Showa Shell added 3.2 percent.
In South Korea, steelmaker Posco plunged 6.2 percent, shipbuilder Hyundai Heavy Industries fell 4.9 percent and Samsung Electronics -- the country's largest corporation -- fell 1.8 percent.
In Hong Kong, China Merchants Holdings plummeted 10.9 percent and Sino Land fell 10 percent. New World Development dropped 8.2 percent and China Resources fell 9.3 percent.
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