Stocks fall as Germany announces recession

LONDON (AFP) - Global stock markets mostly fell Thursday on news that the German economy was officially in recession and after heavy losses in Asia and overnight on Wall Street. New York stocks took a hammering on Wednesday after the US government tore up a plan to buy toxic mortgage assets. The gloom spread to Asia amid fears of a sharp worldwide economic slowdown. Wall Street was to reopen at 1430 GMT. German investors fretted over news that the nation's economy has fallen into recession for the first time in five years as a result of the global financial crisis. The Frankfurt stock market fell 0.49 percent near the half-way stage on Thursday. London was down 0.98 percent, while Paris added 0.65 percent. In Asia, Tokyo tumbled 5.25 percent, Hong Kong dived 5.15 percent and Sydney shed 5.9 percent to finish at a four-year low. "Germany " and the eurozone " have to get ready for a serious recession," warned Bank of America senior economist Holger Schmieding. Wall Street plunged Wednesday as global markets were rattled by signs of impending recession in Europe and a shift in the US government's financial bailout strategy. A profit warning from the biggest US consumer electronics retailer, Best Buy, also sapped confidence, which was already fragile following weeks of market turmoil sparked by a global credit crunch. Adding to the gloom, Intel Corportion, the world's biggest computer chipmaker, cut its fourth-quarter revenue projections, saying the economic slowdown would hurt its business across the board. Washington's U-turn on the financial bailout plan "also came out of the blue, discouraging investors," said Motoki Ichikawa, investment information chief at SMBC Friend Securities. Markets across Asia were mired in losses after Wall Street's Dow Jones Industrial Average sank 4.73 percent on Wednesday on gloomy corporate news and the shift in the bailout strategy. US Treasury Secretary Henry Paulson said Wednesday that the Wall Street bailout plan would be refocused on continued capital injections for ailing banks and possible steps to help the non-bank financial sector, such as car loans and credit cards. Paulson ruled out using part of the 700-billion-dollar rescue package for the troubled auto sector, which has warned it will soon run out of cash. The White House refused to say whether US auto giants were too big to fail. European stock markets had fallen heavily on Wednesday, as the Bank of England said the British economy was likely in recession. In Kuwait on Thursday, stock exchange trading was halted after a court in the Gulf state ordered the bourse to be suspended in a bid to stem massive losses for small investors. Russia's two main stock markets, the RTS and the MICEX, also briefly suspended trading on Thursday after plunging at the open, following trading suspensions the previous day. Investors were turning their attention to a summit on the financial crisis that will bring together leaders of the Group of 20 industrialised and emerging nations from Friday in Washington. Japan will offer at the meeting to lend up to about 100 billion dollars to the International Monetary Fund to help boost loans to emerging countries hit hard by the financial crisis, local media reported.

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