World markets plunge after decline in New York

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The Independent Online

Disappointment with a half-point U.S. interest rate cut triggered another sharp sell-off in markets around the world today, as gloom spread beyond technology stocks to include shares in banks and other Old Economy mainstays.

Disappointment with a half-point U.S. interest rate cut triggered another sharp sell-off in markets around the world today, as gloom spread beyond technology stocks to include shares in banks and other Old Economy mainstays.

"This is about a market that is forecasting a recession," said Gary Kaltbaum, a technical analyst at First Union Securities. "I know a lot of people are saying we are not in a recession, but remember 12 months ago people were saying technology was great and wasn't going anywhere but up."

The Dow Jones industrial average, which dropped by triple digits in six of the past nine trading sessions, fell 212.53 at 9,274.47, putting the Dow down more than 20 percent from the closing high of 11,722.98 it reached on January 14, 2000. A drop of 20 percent is considered bear market territory.

The Nasdaq composite index, which is down more than 63 percent from its own high of 5,048.62, reached March 10, 2000, was off slightly early today, falling 21.36 to 1,808.87. The market's broadest measure, the Standard & Poor's 500, was down 26.23 at 1,095.91.

Investors have been in a sour mood since the U.S. Federal Reserve trimmed interest rates by half a percentage point on Tuesday - less than the three-quarters of a point many had been looking for.

They responded by unloading their shares for the second consecutive day.

In late trading, the FTSE 100 index plunged 3.7 percent to 5,335.9 points.

In Germany, the Deutsche Boerse's DAX index of leading stocks fell 4.5 percent to 5,369.46 points, led by Siemens and Deutsche Telekom and also by Deutsche Bank, whose shares dropped 3.1 percent on fears about weakness in investment banking.

In France, the Paris CAC-40 index dropped 4.3 percent to 4,809.5 points.

Asian markets fared no better.

Tokyo share prices plunged early today, after the 7.5 percent rally a day earlier by the 225-issue Nikkei Stock Average. They soon bounced into positive territory before turning lower again - although they managed to cling to most of what they gained during Wednesday's impressive advance.

The Nikkei closed with a loss of 1.9 percent at 12,853.97 points.

Japanese traders quickly shrugged off any concerns about the U.S. rate cut not being big enough and instead have been focusing on the recent reduction of Japanese interest rates to almost zero as well as pledges to reduce bad bank debts.

But some analysts expressed concerns that Tokyo's rally on Wednesday - when other markets around the globe were mostly lower - may have been a bit much.

"The market will remain in a period of volatility for some time," predicted Masaaki Kanno, chief economist at J. P. Morgan Securities Asia in Tokyo.

Hong Kong shares fell further today, with the Hang Seng Index closing with a drop of 4.1 percent.

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