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LONDON: Global stock markets plunged Monday, despite news that Japan has emerged from recession, as investors questioned the strength of a tentative worldwide economic recovery, dealers said.
China, Tokyo and Hong Kong bore the brunt of losses in Asia as investors reacted to a weak consumer confidence survey published last week for the United States, the world's biggest economy.
European equities also sank, mirroring heavy losses before the weekend in New York, as the downbeat US data overshadowed news that Japan, the world's second biggest economy, pulled out of recession in the second quarter.
London lost 1.71 per cent in late morning deals, while Frankfurt shed 1.84 per cent and Paris dived 2.12 per cent near the half-way stage.
"European markets (are) tracking Asia lower as investors focus on the poor US consumer confidence figures that came out on Friday rather than the encouraging data out from Japan overnight," said trader Arifa Sheikh-Usmani at financial spread-betting firm Spreadex.
"Markets still feel that any potential upturn in the global economy will be short term and fragile rather than sustainable just yet."
In Asia on Monday, Shanghai led the falls, giving up 5.79 per cent, while Tokyo slumped 3.10 per cent, Hong Kong 3.62 per cent and Seoul 2.79 per cent.
The drop comes after several weeks of rallies, which have seen many markets hit highs not seen since late last year.
The British stock market also ran into profit-taking after striking a 10-month peak last week on news that France and Germany had both emerged from recession.
Dealers took their cue from Wall Street, which lost 0.82 per cent on Friday after the data threw into doubt hopes of an end to the worst global economic crisis for decades.
"Friday's disappointing consumer data from the US has reignited fears over the pace of the US/global recovery," said Stuart Bennett, an analyst at French investment bank Calyon.
Monday's losses came on the day that Japan announced that it had moved out of recession. The country rebounded for the first time in five quarters, following Germany and France in returning to positive growth.
Japan's economy grew 0.9 per cent in April-June, after shrinking a revised 3.1 per cent the previous quarter and by 3.5 per cent in October-December 2008, the government said.
The figures were helped by data showing exports rebounded 6.3 per cent in April-June -- the first increase in five quarters.
However, news that Japan's economy climbed out of recession had been widely expected and failed to give stocks a boost.
"Momentum in economic data has remained broadly positive in recent weeks as economies pull out of recession," said analyst Rossa White at Davy stockbrokers in Dublin.
"Last week's GDP figures from France and Germany confirmed that those economies were no longer shrinking as of the second quarter. We reckon that if we had real-time GDP data for the UK and US it would show that they have emerged from the contraction too.
"But the pace of consumer spending growth remains a worry for markets: Friday's up-to-date (August) consumer confidence data from the US were disappointing and led to a sell-off today in Asia."
- AFP/yt
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