- The Washington Times - Monday, March 30, 2009

LONDON (AP) - World stock markets slid Monday amid renewed fears about the fate of the U.S. auto industry and the global banking sector as well as mounting pessimism surrounding this week’s G-20 meeting of leaders.

The FTSE 100 of leading British shares was down 79.39 points, or 2 percent, at 3,819.46, while Germany’s DAX slumped 129.32 points, or 3.1 percent, to 4,074.23. The CAC-40 in France fell 60.63 points, or 2.1 percent, to 2,779.99.

Earlier in Asia, Japan’s Nikkei 225 stock average sank 390.89 points, or 4.5 percent, to 8,236.08, and Hong Kong’s Hang Seng slid 663.17, or 4.7 percent, to 13,456.33.

The retreat in Europe and Asia followed a sell-off Friday on Wall Street, where investors booked profits on the Dow Jones industrial average’s 21 percent gain over 13 trading days.

U.S. stock futures pointed to more losses Monday on Wall Street. Dow futures fell 161, or 2.1 percent, to 7,601 while Standard & Poor’s 500 futures fell 17.6 points, or 2.2 percent, to 798.50.

Stock market sentiment was hit by a combination of factors on Monday, with automakers under particular pressure after the White House rejected the turnaround plans from General Motors Corp. and Chrysler. The Obama administration also replaced GM’s CEO Rick Wagoner with the company’s chief operating officer, Fritz Henderson.

In Japan, Toyota Motor Co., the world’s largest automaker, fell 3.7 percent, Honda Motor Co. shed 6.7 percent, and Nissan Motor Co. dived 7.7 percent. In Europe, Germany’s BMW AG and Daimler AG both fell around 8 percent, while France’s Renault SA and PSA Peugeot-Citroen SA dropped 9 percent and 7 percent.

Banking stocks were also sold off heavily after U.S. Treasury Secretary Tim Geithner failed to rule out in a weekend interview the possibility that some of the U.S. banks may need more government funds to get them lending again. A bailout fund for battered banks still has $135 billion left in it, although Geithner said a second batch of money might be needed, despite public frustration with the already allocated money.

Investors have also been unnerved by the news that Spain was bailing out Caja Castilla-La Mancha _ its first bank rescue in 16 years _ and reports that UBS AG is about to cull another 8,000 jobs.

The main focus of attention in markets this week will be Thursday’s meeting in London of G-20 leaders of industrialized and developing countries. While the leaders will look to present a show of unity, especially on global markets regulation, earlier hopes of a coordinated fiscal boost appear to have been dashed by skepticism in many European governments.

In an interview with the Financial Times newspaper, President Barack Obama conceded that there was a “legitimate concern” that many countries will want to see how their earlier stimulus measures have worked before unveiling further packages.

With new fiscal stimulus plans not expected to feature in the ensuing communique and differences of opinion between Europe and the U.S. still persisting, stock markets have started the week on a fragile note.

“Taken in conjunction with news of fresh U.S. automotive problems and with some negative benchmark data releases in the offing _ notably the (Japanese) Tankan survey and U.S. non-farm payrolls _ this means that the coming week will be a particularly testing period in what is already an unprecedented era in financial market history,” said Neil Mellor, an analyst at Bank of New York Mellon.

Elsewhere in Asia, South Korea’s benchmark fell 3.2 percent while markets in Singapore, Taiwan, and India fell 3 percent or more.

In oil markets, prices tumbled to below $51 a barrel as investors cashed in on recent gains. Benchmark crude for May delivery fell $1.80 to $50.58 in electronic trading on the New York Mercantile Exchange.

The dollar fell to 96.97 yen from 97.84 yen late Friday, while the euro dropped to $1.3193 from $1.3288.


Associated Press Writer Stephen Wright in Bangkok contributed to this story.

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