U.S. stocks open lower after drops in Asia, Europe

LONDON -- U.S. stocks opened lower Monday after stocks fell sharply in Europe and Asia, where Japan's Nikkei stock index dropped to a 26-year low..

"I don't know the answer to where the bottom is," said Howard Wheeldon, senior strategist at BGC Partners in London. "It's an overreaction. It feeds and fuels itself."

The week-opening slide across Europe and nearly all Asia comes despite new efforts to boost liquidity and stabilize countries' banking systems.

London's FTSE 100 index was down 4.16% just before noon local time, recovering from a 5.6% fall earlier to 3,665 that was its lowest level since April 2003. The Cac 40 in Paris was down 5.7% and Frankfurt Dax was down 3.4%.

In Tokyo, the Nikkei 225 index closed down 6.4% to 7,162.90, despite signs the government would step in with cash for banks to calm the markets. That was the index's lowest point since October 1982.

Hong Kong's Hang Seng Index fell 12.7% to 11,015.84. The slide followed a move there by central bankers to inject more money into their markets to ensure liquidity. That was the index's lowest close in more than four years.

Only South Korea's market managed a gain after a move by that nation's central bank to cut its key interest rate by the biggest amount ever to try to ward off recession.

In Europe, the International Monetary Fund agreed to lend Ukraine $16.5 billion to stabilize that country's financial system. It also announced it would help Hungary stabilize its finances.

The new action by governments, central banks and the IMF follows pledges earlier this month from Washington to London to Seoul to pump more than $3 trillion of liquidity into banking systems to stave off a collapse of credit markets.

So why are markets across the globe continuing to slide if money is coming?

Wheeldon says fearful investors haven't seen signs that the promises have made any difference yet to banks and that banks, in turn, are lending more to customers.

"The huge amount of liquidity … hasn't gone in yet," Wheeldon said. "All we've had is talk and promises."