World stocks dive amid new wave of job cuts
Posted: 20 November 2008 1737 hrs

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LONDON - Global stock markets fell hard Thursday, with Tokyo losing nearly seven per cent and European indices deep in the red after sharp overnight losses on Wall Street and amid a fresh wave of major job cuts.

"Equities look set to continue their slide after big falls on Wall Street were followed by a broad-based sell-off across the Asian markets," said CMC Markets dealer Matt Buckland.

Isuzu Motors on Thursday said it would cut 1,400 jobs and slash domestic production by 10 per cent, the latest in a slew of layoffs by Japanese automakers to cope with a global economic slowdown.

French carmaker PSA Peugeot Citroen meanwhile announced plans to slash 2,700 jobs.

In London, the British maker of plane engines Rolls-Royce said it anticipated cutting between 1,500 and 2,000 jobs worldwide in 2009, or up to five per cent of its workforce.

Multi-nationals are announcing major job-cutting programmes on an almost daily basis as leading industrialised countries fall into recession and as the financial sector attempts a massive recovery after being hit by a credit crunch.

US bank Citigroup had on Monday said it was slashing a near-record 50,000 jobs worldwide.

Meanwhile the drive for an additional 25-billion-US-dollar bailout for ailing American automakers, backed by Democrats in the US Congress, stalled on Wednesday as Republican lawmakers insisted the sector use funds from a previous bill.

Executives from General Motors, Ford and Chrysler have begged Congress for the multibillion-dollar loans and warned the industry faces a "catastrophic collapse" if the lawmakers do not come to the rescue.

In early European stock market trading on Thursday, London showed a loss of 2.08 per cent as it fell beneath 4,000 points. Frankfurt shed 3.40 per cent and Paris dropped 3.35 per cent to below 3,000 points.

The continent's major indices had closed sharply lower on Wednesday, with losses of almost five per cent being recorded in London and Frankfurt.

On Thursday, Tokyo closed down a huge 6.89 per cent, Hong Kong shed 4.0 per cent, Seoul dived 6.7 per cent and Sydney slid 4.2.

"What I can see is that the distressed selling is continuing and at a greater rate than it has in the last three or four weeks," said Bell Potter senior adviser Stuart Smith.

"It's forced selling. There can be no other reason. The market's trying to find an absolute floor."

Gulf stock markets traded mixed on Thursday as Kuwaiti shares continued their recovery on the back of a government rescue plan.

The Kuwait Stock Exchange, the second largest bourse in the region, was up 0.6 per cent nearing the close, while Dubai fell 3.6 per cent.

US stocks plunged to five-and-a-half-year lows on Wednesday after data revealed a sharp deterioration in the world's largest economy and the Federal Reserve admitted the risk of a long recession.

The Dow Jones Industrial Average tumbled 5.07 per cent to finish below 8,000 points for the first time since March 31, 2003.

The tech-heavy Nasdaq skidded 6.53 per cent to the lowest level since April 14, 2003 and the broad Standard & Poor's 500 index retreated a hefty 6.12 per cent, also to a five-and-a-half-year low.

"Talks on aid to automakers appear doomed in Washington and economic reports suggest a deepening recession," said Al Goldman, analyst at Wachovia Securities.

The Labor Department reported that US consumer prices plunged 1.0 per cent in October, the steepest fall since the data was first published in February 1947.

The Commerce Department separately reported that builders broke ground on the fewest number of new homes since it began publishing the data in January 1959.

- AFP/ir