Markets in Europe and Asian slid Friday, signaling alarm over a broadening deterioration in the U.S. housing sector that is beginning to resonate worldwide.
Carlyle Capital Corp. said it had received additional margin calls and default notices for its $21.7 billion portfolio of residential mortgage-backed securities. Shares in the fund were suspended Friday on Euronext Amsterdam.
Japan’s Nikkei 225 index fell 3.3 percent to close at 12,782.80 as investors sold exporters’ shares amid the dollar’s drop to a three-year low against the yen during Asian trading.
The U.K.’s benchmark FTSE 100 sank 1 percent, while Germany’s DAX fell 1.2 percent. France’s CAC 40 declined 1.1 percent.
“Equities look set to finish the week in something of a downbeat mood,” said Matt Buckland, a trader at CMC Markets in London.
Hong Hong’s Hang Seng index closed down 3.6 percent, bringing its decline since the start of the year to 19 percent.
Yet early Friday, Dow futures rose 6, or 0.05 percent, to 12,076. S&P 500 futures advanced 1.60, or 0.12 percent, to 1,309.50, and the Nasdaq 100 index rose 4.75, or 0.28 percent, to 1,719.00.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.54 percent from 3.59 percent late Thursday.
The Mortgage Bankers Association said Thursday that the proportion of U.S. mortgages falling into foreclosure jumped to a record 0.83 percent in the final quarter of 2007.
The Federal Reserve reported that Americans’ home debt exceeded their equity for the first time since the central bank began tracking the figures in 1945. Homeowners’ percentage of equity fell to 47.9 percent in the fourth quarter.
“We are worried about the U.S. market,” said Shim Jae-youb, a strategist at Meritz Securities Co. in Seoul.
Investors were bracing for a key U.S. jobs report Friday. Economists on average were predicting a modest gain in February payrolls, though some expect a decline. Shim said investors were “pessimistic” about what it would say.
In Tokyo, investors sold exporters’ shares like Sony Corp. and TDK Corp. after the dollar fell against the yen. In early European hours, the U.S. currency extended declines, trading at 102.05 yen.
Shim also said potential credit defaults in the United States were weighing on sentiment.
He pointed to Thornburg Mortgage Inc., which this week failed to make a margin call, or a payment to guarantee a much larger debt or investment.
Turmoil has engulfed global equities since last summer as rising default rates among U.S. mortgage holders with poor credit histories — or subprime loans — raised concerns of a spillover effect that could lead to recession in the world’s largest economy.
U.S. consumer confidence dropped to a new low amid worries about growth prospects, the housing and credit markets and high energy prices.
Traders said that more bearishness could be expected.
“We still have some downside left in the market, which is sad to say, but that’s the way it is looking trend-wise, it is still looking heavy,” CMC Markets senior dealer Dominic Vaughan said of Australia’s market.
Elsewhere, the Philippine Stock Exchange Index plunged 2.8 percent to a six-week low, while in mainland China the Shanghai Composite Index fell a more moderate 1.4 percent.