World stocks down on Europe debt plan doubts

Associated Press
People are reflected on an electronic board of a securities firm, which shows the yen-dollar foreign exchange rate, a day after after the Bank of Japan weakened its currency to help Japanese exporters,  in Tokyo, Japan, Tuesday, Nov. 1, 2011. On Monday, The Bank of Japan says it sold yen and bought dollars during Tokyo trading in order to pull the yen down from a post-World War II high against the dollar.   (AP Photo/Koji Sasahara)
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People are reflected on an electronic board of a securities firm, which shows the yen-dollar foreign exchange rate, a day after after the Bank of Japan weakened its currency to help Japanese exporters, in Tokyo, Japan, Tuesday, Nov. 1, 2011. On Monday, The Bank of Japan says it sold yen and bought dollars during Tokyo trading in order to pull the yen down from a post-World War II high against the dollar. (AP Photo/Koji Sasahara)

BANGKOK (AP) — World stock markets sank Tuesday as new concerns emerged about the viability of a much-heralded plan to contain Europe's debt crisis.

Benchmark oil fell below $92 a barrel. The dollar surged against the euro, and it rose slightly against the yen — a day after jumping about 5 percent following Japan's move to buy dollars and sell the strong yen to protect its exporters.

European shares slid in early trading. Britain's FTSE 100 tumbled 2.6 percent to 5,401.98 and Germany's DAX dived 3.8 percent to 5,910.15. France's CAC-40 lost 3.3 percent to 3,139.55.

Wall Street was headed for a second day of losses, with Dow Jones industrial futures dropping 1.1 percent and S&P futures recoiling 1.6 percent.

Stock markets in Asia didn't fare much better. Japan's Nikkei 225 index retreated 1.7 percent to close at 8,835.53. Hong Kong's Hang Seng lost 2.5 percent to 19,369.96 and Australia's S&P/ASX 200 shed 1.5 percent to 4,232.90. Benchmarks in Singapore, India, Indonesia and Thailand were also down.

South Korea's Kospi gained marginally to 1,909.63 and China's Shanghai Composite Index added 0.1 percent to 2,470.02.

Markets were on edge as events in Europe undermined optimism about the debt crisis deal that European leaders agreed last week to shore up the continent's banks and prevent Greece from defaulting.

Greek Prime Minister George Papandreou on Monday said that his debt-strapped country will hold a referendum on whether to accept the European deal — complicating an already elaborate implementation process.

"That puts everything in question. No longer do you have Greece backing it," said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong. "It is putting another level of uncertainty into it, and the markets don't like uncertainty."

Another troubling sign is that borrowing costs for Italy and Spain have increased, showing that traders remain worried about those countries' ability to pay their debts.

Confidence has also been shaken by the collapse of the brokerage house MF Global. The securities firm filed for bankruptcy protection after it was downgraded by ratings agencies for holding too much European debt.

Meanwhile, surveys showing China's manufacturing remained sluggish in October also weighed on investor sentiment. Hong Kong-listed shares of GOME Electrical Appliance Holdings, China's largest appliances retailer, plunged 7.8 percent. Anhui Conch Cement Co. fell 6.4 percent.

Qantas Airways rose 1.1 percent as the world's 10-largest airline took to the skies again after a debilitating series of strikes and subsequent staff lockout were halted by an Australian court.

Weak earnings weighed on some shares.

Japanese consumer electronics giant Panasonic Corp. tumbled 5.1 percent, a day after reporting a quarterly loss and projecting a huge annual loss due to slumping TV sales and a strong yen.

Australian retailer Harvey Norman fell 3.7 percent after the company reported a drop of almost 20 percent in pretax earnings in the three months to September.

Chinese automaker BYD, which is backed by billionaire investor Warren Buffet, rose by the daily limit of 10 percent. While the company's profit fell nearly 86 percent to 352.7 million yuan ($55.5 million) in January-September, it jumped nearly sixfold in the third-quarter from a very low base the year before, as sales were energized by the introduction of new models.

Wall Street tumbled Monday, with the Dow Jones industrial average spiraling down 2.3 percent to 11,955.01. The S&P 500 fell 2.5 percent to 1,253.30, and the Nasdaq composite fell 1.9 percent to 2,684.41.

In energy trading, benchmark crude for December delivery was down $1.75 at $91.44 a barrel in electronic trading on the New York Mercantile Exchange. The contract slipped 13 cents to settle at $93.19 in New York on Monday.

The euro fell to $1.3701 from $1.3924 late Monday in New York. The dollar rose slightly to 78.09 yen from 78.05 yen.

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AP researcher Fu Ting contributed from Shanghai.

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