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Global stocks slip after Wall Street plunge

European stock markets were mixed Friday in the wake of steep falls on Asian and U.S. exchanges as oil prices hit a record $142 a barrel.
/ Source: The Associated Press

European stock markets were mixed Friday in the wake of steep falls on Asian and U.S. exchanges as oil prices hit a record $142 a barrel.

Germany’s DAX-30 fell 0.46 percent at 6,429.890, the French CAC-40 fell 0.13 percent at 4,420.25 and London’s FTSE 100 rose 0.13 percent to 5,525.40.

In Asia, the sell-off spread across the entire region, with nearly every key Asian index in the red. Shanghai’s benchmark plunged more than 5 percent to a 16-month low and India’s Sensex fell 4.3 percent.

Additionally, Japanese stocks dropped for a seventh day to a two-month low. Markets in Hong Kong, South Korea, New Zealand and the Philippines were off around 2 percent.

U.S. stocks fluctuated Friday after a sharp dive the day before. The Dow was up 20.03, or 0.17 percent, at 11,473.45.

Global market sentiment took a hit after U.S. stocks sank Thursday, with the Dow Jones industrial average sliding more than 3 percent to its lowest level in almost two years.

Worries over the outlook for the American economy — a vital export market for Asia — intensified after dismal news about a number of industries. Analysts downgraded General Motors Corp., Citigroup and Merrill Lynch & Co., while tech companies Oracle Corp. and BlackBerry maker Research In Motion Ltd. offered disappointing forecasts.

Oil prices, which climbed above $140 a barrel late Thursday, surged past $141 in Asian trading Friday and then past $142 in the European trading day, aggravating fears about inflation and rising costs.

“We’ve still got bad news on the credit crunch, we’ve got bad news about consumers,” said Garry Evans, pan-Asian equity strategist with HSBC in Hong Kong. “The macro environment is not a good one and people are very risk averse.”

In China, the Shanghai Composite Index sank 5.3 percent to 2,748.43 points, the lowest close since February 9, 2007. Aside from record crude prices, reports of speculation about possible bank rate hikes were spooking traders.

Institutional investors also were increasingly disappointed with the government for not doing more to slow this year’s slide in Chinese stock prices, said Xu Zhiyuan, strategist at Capital Edge Investment and Management in Shanghai.

“Investors are selling shares regardless of the loss,” he said.

Meanwhile, Tokyo’s benchmark Nikkei 225 index shed 2 percent to 13,544.36. Honda Motor Co. lost 2.7 percent and Sony Corp. dropped 4.3 percent.

Indian stocks sank as investors worried about inflation that has risen to 13-year highs and that recent interest rate hikes would temper consumer spending.

“Sentiment is bearish. There are fears that crude will touch $180, this is a worry that cannot be stamped out easily,” said Gul Tekchandani, a Mumbai-based investment adviser. “Few can stomach this volatility, plus there are weak global cues with the U.S. economy also down.”

Among the big losers were Tata Motors Ltd. and Mahindra & Mahindra Ltd., which both fell more than 7 percent. Leading banks also dropped sharply.

Hong Kong’s Hang Seng Index trimmed earlier losses to close down 1.8 percent at 22,042.35. Refiner China Petroleum & Chemical Corp, or Sinopec, lost 3.6 percent, and airline Cathay Pacific was down 1.7 percent.

Bucking the region’s trend, Thailand’s most-watched index eked out a 0.2 percent gain after the prime minister survived a no-confidence vote, helping defuse political tension in the country.

In currency trading, the dollar dipped to 106.26, from 106.91 yen in New York late Thursday. The euro stood at $1.5742 in mid-afternoon European trading, compared with $1.5751 in New York.