Crisis looms as global sell-off hits world stock markets hard

AP and AFP

LONDON/HONG KONG–The global sell-off in stock markets deepened on Thursday, with European indexes in particular suffering heavy losses amid growing concerns about Greece’s financial stability.

After being stable on the open, the German DAX stock index was down 1.8 percent by midday in Europe. France’s CAC-40 shed 2.3 percent and Britain’s FTSE 100 lost 1.8 percent.

Markets in economically weaker European countries fared worse �X Spain’s was down 2.9 percent and Italy’s 2.8 percent.

The U.S. Commerce Department said retail sales fell in September for the first time in seven months. Total retail and food services sales dropped 0.3 percent from August, slightly more than the 0.2 percent expected on average by analysts. Also Wednesday the Labor Department said U.S. producer prices fell last month for the first time since August 2013. Analysts had expected a rise. The news led to fears that the U.S. economy, which has been showing strong signs of recovery this year, may be feeling the effects of a torpid eurozone, a slowdown in China and stuttering Japanese growth. The Dow fell 1.06 percent �X although it had been more than two percent down earlier in the day �X the S&P 500 shed 0.81 percent and the Nasdaq eased 0.28 percent. Investors are worried about a downturn in global growth and inflation. Slowdowns in Europe and China are seen threatening the U.S. recovery.

In Europe, the biggest concern was Greece, where investors are worried the country might need more financial support as its government borrowing rates have risen sharply in recent days. The country’s benchmark 10-year bond yield was up a stunning 1.13 percentage points on the day on Thursday, to 8.86 percent. The rate was around 6.5 percent just earlier this week.

The rise suggests Greece is unlikely to be able to wean itself off its bailout loans as hoped, because borrowing on bond markets independently would be too expensive.