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Wed, Oct 01, 2008 - Page 10 News List

Global shares slide on rejected bailout

SHOCKWAVES Hong Kong defied the trend, closing 0.8 percent higher as other markets plunged, with Taipei falling 3.55 percent and Tokyo shedding 4.1 percent

AFP , LONDON

Investors worldwide dumped shares yesterday after US lawmakers unexpectedly rejected a multibillion-dollar bailout of beleaguered financial institutions.

Stock markets were not a complete sea of red, however, as Hong Kong ended higher and London rose in morning trade amid sliding oil prices.

Most Asian indices closed sharply lower yesterday after a record plunge on Wall Street overnight.

“The failure of Congress to approve on Monday the [bailout] plan was not in the script. As we have seen, the markets, particularly equities, have not taken it too well,” Standard Chartered chief economist Gerard Lyons said.

Tokyo slumped 4.1 percent to end at a three-year low, Sydney dropped 4.3 percent and Taipei shed 3.55 percent. Hong Kong shares closed 0.8 percent higher after falling more than 6 percent at one point.

In Europe, London was up 0.27 percent in morning trade after falling by 3 percent shortly after the open. Frankfurt was down 0.81 percent and Paris lost 0.52 percent, recovering from much heavier losses at the start of trading.

As the shockwaves from the ongoing financial crisis reverberated around the globe, Russian stock market trading was halted before the open, but began later.

It was another ugly day for markets in Asia where investors sought shelter in havens such as bonds and gold, despite calls from policymakers for calm.

Hiroichi Nishi, equities chief at Nikko Cordial Securities in Tokyo, said he had been shocked by the rejection of the package by Congress.

“The market is exploring where the bottom is now,” he said, adding that all eyes were on whether Congress will vote on the rescue plan again or the White House will come up with new measures.

Markets across the Asia-Pacific region took a beating, although most clawed back some of their losses in late trade.

“There was surprise that the [bailout] bill didn’t get passed,” said Andrew Sullivan, a trader at MainFirst Securities in Hong Kong. “The longer this goes on the more people look at the detail and become concerned that the bill may not solve all the problems.”

Overnight, the Dow Jones Industrial Average had sunk 777.68 points or 6.98 percent to close at 10,365.45, its biggest single-day point decline ever.

Japan’s economic ministers voiced hope the US would act to halt the Wall Street meltdown.

The rejection “has a significant impact on not only the US economy but the world economy,” Kaoru Yosano, the minister for economic and fiscal policy, told reporters.

Japan’s central bank injected ¥3 trillion (US$28.8 billion) into the Tokyo money market, the 10th straight business day it has pumped cash into the domestic financial system to try to keep credit flowing.

The euro was under pressure after the rescue of several European banks deepened worries about the region’s banking sector.

Meanwhile, crude oil prices fell more than US$2 after slumping 10 percent on Monday. The oil market selloff was driven by worries that further economic turmoil in the US could significantly dampen global oil demand, traders said.

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