World Stocks Slide After Dow Posts 6-Year Low

Pedestrians are reflected on the electronic board at a securities firm in Tokyo Friday, Feb. 20,...

Pedestrians are reflected on the electronic board at a securities firm in Tokyo Friday, Feb. 20, 2009. Japanese stocks extended its losing streak Friday as unrelenting fears about the global economy sent a key stock index hurtling to a quarter-century low. The benchmark Nikkei 225 stock average fell 141.27 points, or 1.9 percent, to 7,416.38. (AP Photo/Katsumi Kasahara)

(AP)

World stock markets fell sharply Friday as the selling pressure on Wall Street was expected to continue at the open later amid pessimism about the ability of governments to prevent the deepest global economic downturn in generations.

Investors in Asia and Europe found few reasons to wade into the market after the Dow Jones industrial average breached the levels it touched in November, when global equities went into a tailspin as the financial crisis gathered steam.

The Dow's miserable finish — its close Thursday of 7,465.95 was its worst since Oct. 9, 2002, when the last bear market hit rock bottom — deepened concerns that the markets' downturn is far from over and could be set for a new phase. It also provided a clear sign that investors don't see a quick end to the worst global slowdown in decades despite the unprecedented intervention in economies and markets by governments around the world.

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"Investors are quite simply running out of short-term confidence with equities — especially among the banks — and as they batten down the hatches we're seeing these big technical levels being tested with arguably little regard for the fundamentals." said Matt Buckland, a dealer at CMC Markets.

In Europe, the FTSE 100 index of leading British shares fell 101.12 points, or 2.5 percent, to 3,917.25, while Germany's DAX slumped 132.33, or 3.1 percent, to 4,082.88. The CAC-40 in France dropped 91.55 points, or 3.2 percent to 2,781.05.

In Asia earlier, Japan's Nikkei 225 stock average lost 141.27 points, or 1.9 percent, to 7,416.38, and the broader Topix index hurtled to its worst finish in 25 years. Hong Kong's Hang Seng dropped 324.59, or 2.5 percent, to 12,699.17.

The selling pressure was set to resume in the U.S. at the open, with Dow futures 98 points, or 1.3 percent, lower at 7,364, and the broader Standard & Poor's 500 futures down 10.9 points, or 1.4 percent, at 768.50.

"Investors seem to have retreated to the sidelines as they wait and see how the latest government actions will address the ongoing problems in the banking and housing sectors," said Mansoor Mohi-uddin, an analyst at UBS.