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Stocks in the US sank yesterday as another round of weak economic data added to recession fears and a record loss at AIG, the world's biggest insurer, underscored worries about the financial sector.
Major stock indices fell 2 per cent and, adding to the gloom, Atlanta Federal Reserve Bank President Dennis Lockhart said home prices and credit card debt could further limit consumer spending, a key element of economic activity.
Financial service company shares led the broad market lower after dismal results. AIG fell 7.2 per cent to US$46.55 and was among the top drags on the Dow and the S&P 500. Shares of Bank of America lost 3.4 per cent to US$40.03.
"We had some good news earlier in the week, but the market is stuck now," said Todd Leone, head of listed trading of Cowen & Co in New York.
"It's been a little of everything. AIG spooked the market... economic news has not been good, either. [Lockhart] might have disappointed a little bit."
The Dow Jones industrial average dropped 269.63 points, or 2.14 per cent, to 12,312.55. The Standard & Poor's 500 Index fell 31.50 points, or 2.30 per cent, to 1336.18, while the Nasdaq Composite declined 50.40 points - or 2.16 per cent - to 2281.17.
On the Nasdaq, Dell, the world's second-largest personal computer maker, fell 4.6 per cent to US$19.93, a day after it posted a lower-than-expected quarterly profit and cautioned that customers might rein in spending.
Meanwhile, Britain's top share index fell 1.36 per cent in a global sell-off, with banks leading the fall after weak US consumer sentiment data stoked concerns.
The FTSE 100 ended down 81.4 points at 5884.3, after losing 110.8 points on Thursday. Over the week, it shed 4.2 points.
European shares fell for a third day as weak US data deepened fears of recession, hitting the banking sector.
The FTSEurofirst 300 index of top European shares fell 1.4 per cent to 1315.28, bringing losses for February to more than 1 per cent and marking the fourth consecutive monthly decline.
In Tokyo, the Nikkei average fell 2.32 per cent to post a one-week closing low, with Sony and other exporters taking a beating on a clouded earnings outlook after the dollar touched a three-year low against the yen. The index fell 322.49 points to end at 13,603.02, gaining 102.56 points since February 22.
Blue chips in Hong Kong fell 1.06 per cent. The Hang Seng ended down 260.02 points at 24,331.67, but rising 1026.63 points over the week and up 3.7 per cent for the month.
Across the ditch in Sydney, shares fell 1.4 per cent, dragged down by financial firms, such as Commonwealth Bank of Australia, as investors worried that the fallout of housing sector woes on US banks might spread to Australia.
The S&P/ASX 200 index finished down 79.1 points at 5572.1, ending the week up just 12.2 points or 0.2 per cent, but down 1.4 per cent for the month.
In Johannesburg, rand and bond prices fell sharply, as a sell-off that started in Asia continued as investors looked forward to trade and producer price-index data. The All-share index closed at 30,673.74 points, up 507.42 or 1.68 per cent, rising on the week by 824.85.
- REUTERS
