Asian, European stocks slide

Asian and European shares dipped Wednesday as markets continued to battle jitters over a credit crunch started by problems in the US subprime credit sector and as broader concerns emerged about the US economy.

In Asia, Tokyo and New Zealand benchmarks tumbling to their lowest closes in nine months. In Europe in early trade, the UK's FTSE 100 index fell 0.9 per cent shortly after the market opened. France's CAC 40 benchmark fell 1.21 percent, and Germany's DAX fell 0.8 per cent.

In Asia, some economists and dealers said the gyrations on Asian stock markets were short-term. Some issues could even be good bargains, they said, given the strong growth and earnings data from China, Japan and other regional economies.

The Nikkei 225 stock index, the benchmark for Asia's biggest stock market, plummeted 369.00 points, or 2.19 per cent, to 16,475.61, its lowest since Dec. 8, as financial issues got hammered by the nervousness about a fallout from the US subprime mortgage crisis.

Japanese export issues also took a battering from the strong yen. Worries have been growing about a slowdown in the US economy, fueled by faltering profit forecasts by major retailers.

Weak American spending would be a blow to the Japanese and other Asian economies, which are all still heavily dependent on exports to the US.

In New Zealand, the benchmark NZX-50 index slipped below the psychological 4,000 barrier before ending down 1.5 per cent at 4,004.46 its lowest closing since December 2006.

``It's not a particularly pretty day for the market. World markets are all just following each other at the moment and they're quite skittish,'' said UBS equities director Paul Nicolson in New Zealand.

Midafternoon, Hong Kong's Hang Seng Index was down 3.0 per cent and Singapore's Straits Times Index was down percent.

The benchmark index in the Philippines closed 4.1 per cent lower and Taiwan's Weighted Price Index fell 3.6 per cent.

``We remain confident that things can calm down,'' said David Cohen, director of Asian forecasting at Action Economics in Singapore. ``There is enough momentum in the global economy it should ultimately sustain the solid growth in world GDP through the middle of the year.''

In the short term, though, Cohen warned more bad news could be expected about troubled hedge funds, which could set off another drop in regional stocks.

``It's going to be on a roller coaster for a little while. Clearly investors are nervous,'' he said.

Traders in Tokyo said bargain-hunting there may keep Japanese stocks from plunging too much. Some analysts also say market sentiment in Tokyo remains upbeat as worries about subprime mortgages in the US may make it less likely the Bank of Japan will raise interest rates later in the month.

Prime Minister Shinzo Abe said Japan's economy remains on a growth track. Earlier this week, the government reported that the world's second largest economy marked its 10th straight quarter of expansion April-June, although the pace of growth had moderated.

``The Japanese economy remains strong,'' Abe told reporters. ``We do need to keep a close watch.''

But fears remain about the future of the overall US economy. Tuesday, US retailers announced lower profit forecasts, including Wal-Mart Stores Inc and Home Depot Inc. A slowdown in the US economy, a key export market for Asia, could spell a more real danger for the region.

Overnight in the US, the Dow shed 1.57 per cent to 13,028.92, on the verge of falling below the psychologically important 13,000 mark, which it first crossed in late April.

Elsewhere in Asia Wednesday, Jakarta's main stock index was down 5.3 per cent, Australia's benchmark was down 3.0 percent, and Thailand 2.2 per cent.

Stock markets were closed in India and South Korea for national holidays.