Markets plunge on US recession data, global gloom
AFP - 1 hour 6 minutes ago
WASHINGTON (AFP) - - Stock markets around the world have taken another drubbing, falling sharply on news that the US economic recession began a year ago, as a deluge of weak data pointed to a severe global slowdown.
A private panel of US economists charged with the official designation of business cycles, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), said it had determined the world's largest economy has been in recession since December 2007.
Although a recession is generally defined as two consecutive quarters of declining activity, the panel has its own criteria for determining a downturn .
US President George W. Bush's administration acknowledged the NBER conclusion and said it has been working to foster recovery.
"The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that's where we'll continue to focus," White House spokesman Tony Fratto said.
A fresh wave of selling overtook the markets, with the Dow Jones Industrial Average sinking 7.70 percent, the fourth-steepest point loss in history for the blue-chip index.
Japan's Nikkei stock index was down more than five percent and Australian shares fell 3.3 percent in early trade on Tuesday.
A new set of grim figures pointed to a deepening recession in Europe, officials painted a grim outlook for Japan and a top auto chief warned of "massive" job losses in the auto industry.
Fresh data released on Monday showed German retail sales fell 1.6 percent in October from the previous month, while in France a closely watched index of manufacturing activity fell to 37.3 in November, its worst-ever reading.
"Germany is in the grip of a recession which will probably be more severe than widely expected," Commerzbank analyst Simon Junker said.
"Private consumption does not appear strong enough to alleviate the recession in Germany or bring it to an early end."
Across the 15-nation eurozone, an index of manufacturing activity hit a record low of 35.6 points last month, the Markit research group reported.
In Brussels, eurozone finance ministers grappled with how to coordinate their efforts to counter recession, with Germany voicing reservations about European Union plans for a 200-billion-euro (252.5-billion-dollar) stimulus package.
"All member states are convinced of the need to react in the short term to this difficult economic situation," said EU Economic Affairs Commissioner Joaquin Almunia.
The European Commission called last week for a sharp boost to public investment and social spending across Europe while giving embattled consumers a range of tax breaks.
Finance ministers of the 27-nation EU were to discuss the plan on Tuesday.
In China, manufacturing activity hit a three-year low in November, underlining the fallout of the global financial crisis on emerging markets.
The purchasing managers' index (PMI) dropped to 38.8 percent in November, down from 44.6 percent in October and the lowest since the government introduced the survey in 2005, said the Xinhua news agency.
Meanwhile, India's exports in October tumbled 12 percent from a year ago for the first time in three years, hit by slumping demand in its key US and European markets.
In the US, with the auto sector teetering on the brink of collapse, the heads of the "Big Three" -- General Motors, Ford and Chrysler -- were to return to Congress this week to plead for a rescue package.
Embattled Ford said Monday it would consider selling its Sweden-based subsidiary Volvo Car.
In Japan, sales of new cars plunged 27.3 percent in November to 215,783 vehicles, the lowest since 1969, the Japan Automobile Dealers Association said.
Auto manufacturers in Europe also struggled. Sales of new cars plummeted an unadjusted 14 percent in November from a year earlier in France and 5.0 percent on a comparable number of working days.
The series of gloomy reports battered US and European stock markets.
Wall Street plunged, with the Dow Jones industrials falling 7.7 percent while the broad-market Standard & Poor's 500 index sank 8.93 percent.
Shares in London, Paris and Frankfurt closed more than 5.0 percent lower.
Asian stock markets closed mixed. Hong Kong rose 1.6 percent and Shanghai 1.25 percent while Tokyo lost 1.35 percent and Sydney 1.6 percent.
Finance ministers from the 15 countries sharing the euro failed on Monday to commit to a proposed 200-billion-euro economic stimulus target while agreeing they need a joint anti-recession package.
While a consensus has emerged on the need to coordinate economic stimulus across Europe, countries such as Germany refuse to contribute more than what they consider is necessary to get their national economies moving and no more.
The European Commission aims to secure backing for the package from EU heads of state and government when they meet in Brussels at a December 11-12 summit.
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