US stocks plunged following news on the lack of a new Chinese economic stimulus plan, and led by fears about the survival of GM. In Europe a sober mood followed yesterday's rallying, with the FTSEurofirst 300 index closing down 3.6 percent.
US stocks plunged Thursday on a spate of weak economic news, corporate woes and disappointment about the lack of an expected new Chinese economic stimulus plan.
The Dow Jones Industrial Average sank 281.40 points (4.09 percent) to 6,594.44 just after the closing bell, tumbling to a new 12-year low.
The Nasdaq composite shed 54.15 points (4.00 percent) to 1,299.59 while the broad-market Standard & Poor's 500 skidded to its lowest level since late 1996, dropping 30.32 points (4.25 percent) to a preliminary close of 682.55.
The market was hit by a wave of negative news, led by fears about the survival of General Motors after the struggling automaker warned it could face liquidation due to the economic meltdown.
The FTSEurofirst 300 index of top European shares closed unofficially at 671.47 points, down 3.6 percent, almost wiping out Wednesday's gains. The index has lost more than 19 percent so far this year, after plunging 45 percent in 2008.
On Wednesday, the index gained 4 percent on signs of an economic recovery in China. It hit a lifetime closing low on Tuesday.
"What we see today is a sobering of the markets," said Hans-Juergen Delp, equity market strategist at Commerzbank in Frankfurt.
"Yesterday, we had euphoria that was solely due to China, but this can't be the cure to the crisis. The ECB's projection about the European economy is nothing more than blank realism."
Both the European Central Bank and the Bank of England on Thursday cut rates in line with expectations to record lows and staff economists at the ECB were gloomy about the outlook for the 16-nation euro zone, expecting a much sharper contraction this year than previously and only tentative recovery in 2010.
Financial stocks were down, with the DJ Stoxx insurers and DJ Stoxx banks indexes being the two top sectoral decliners.
Across Europe, the FTSE 100 index was down 3.2 percent, Germany's DAX was 5 percent lower and France's CAC 40 was down 4 percent.
Date created : 2009-03-05