Global stocks fell sharply on Wednesday as fear of a worldwide recession elbowed its way into Asian and European markets. With signs that the worst of the credit crisis is easing, weak corporate earnings, rising inventories and falling demand are now in focus from Wall Street to Tokyo. Stocks in Japan declined nearly 7 percent, while an index of equity shares across Asia fell more than 5 percent -- at one point hitting a four-year low.
South Korean shares hit a three-year low, and the country's troubled currency, the won, fell again against the dollar. A $130 billion plan by the Seoul government to strengthen the won, stabilize stocks and restore bank liquidity was announced last weekend, but it has failed, so far, to overcome concern that a global recession will drag down South Korea's export-dependent economy.
European indexes opened low and headed down further through the day. By closing, major exchanges in the U.K., France and Germany were down in excess of 4 percent. Bank of England head Mervyn King had warned in a Tuesday speech about a possible "sharp and prolonged slowdown," and signaled possible future interest rate reductions.
The likelihood of continent-wide interest rate cuts has helped push the euro and the pound down sharply against the dollar, with the euro dipping below $1.30. Crude oil continued its decline, falling below $70 a barrel.
Wall Street stocks fell sharply at opening, and the Dow Jones industrial average was down 403 points, or 4.5 percent, by 2:42 p.m. The Standard & Poor's 500-stock index and tech-heavy Nasdaq were also down. In a sign of an evolving economic slowdown, exporters in Asia are seeing an alarming rise in inventories as demand from the United States and Europe declines, analysts said.