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India On Media |
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| Money
News |
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| US drives stock market sell-off |
| World shares have dropped for a third day on concerns about economic growth and the outlook for corporate profits.
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| UNITED STATES OF AMERICA
, 1-March-2007
9:43:15 AM |
| A shaky and volatile morning in Europe and Asia was compounded by big falls on US markets when they opened.
In early trading, the key US Dow Jones index slipped 1.4%, with the S&P down 1.5% and the Nasdaq losing 1.8%.
In London, the UK FTSE 100 index had lost 1.5%, Germany's Dax was down 1.9% and France's Cac shed 2.1%. Earlier in the day, indexes had fallen in Asia.
"Right now, everything and anything is viewed in a negative light," said stock analyst Dick Green. "It will take a while for the fears to calm down."
The sell-off was triggered on Tuesday by fears of a new tax in China, but has since spread to wider concerns about the state of the US economy and strength of the mortgage market.
On Wednesday, figures from the US Commerce Department showed that the US economy grew at a slower-than-expected pace of 2.2% in the last three months of 2006.
Other figures showed that spending on new home building fell 19.1% during the quarter, the sharpest drop since early 1991, adding to worries over the state of the housing market in the world's largest economy.
"The biggest risk in the next few weeks is likely to come from the US data front and developments in the mortgage and housing markets," said analysts at JP Morgan Chase.
Heady heights
At the same time, investors are questioning whether stock prices have climbed too high, too quickly.
A number of the world's main indexes have broken records recently, and analysts said that corporate earnings may not be good enough to underpin the gains.
"Investors are still wondering if the storm is actually over or not," said Masatoshi Sato, a senior strategist at Mizuho Investors Securities.
"Aftershocks in some markets, where prices are overvalued, may be seen from now on. Volatile and sensitive trading is likely to continue at least until mid-March," he added.
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