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World markets: Beaten up

Japan's Nikkei hit hardest - down 11% - as stocks fall on recession fears.

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A shocking series of events that forever changed the financial markets.

NEW YORK (CNNMoney.com) -- Stock markets around the world suffered another wave of selling on Thursday. In Asia, Japan's Nikkei index fell 11% - the second worst performance in its history. And in Europe, all major exchanges traded lower.

The selloff follows another grim day in U.S. markets spurred by growing fears of a worldwide recession. Government officials and central banks worldwide have stepped up their efforts to stem a global financial crisis and restore confidence.

Taro Aso, the Japanese Prime Minister, said the U.S. government's bailout - President Bush said Tuesday that the Treasury would invest $250 billion and take equity stakes in banks - was partly to blame.

"Since it was insufficient, the market is again falling sharply," Aso told lawmakers, the Associated Press reported.

Other markets in Asia and the Pacific region were lower. Australia's All Ordinaries index fell 6.7%. And in Seoul, South Korea's KOSPI dropped 9.4%. Hong Kong's Hang Seng slumped nearly 5% in afternoon trading. The Taiwan Weighted slipped 3.3% and Singapore's Straits Times index gave back 5.3%.

European markets were having another rough day as well, with indexes across the board trading lower.

U.S. stock futures, which give an indication of how markets will perform at the open, were pointing higher early Thursday morning.

Dow on Wednesday: Down 8%

Wall Street was hit hard on Wednesday as recession fears mounted. The Dow Jones industrial average plummeted nearly 8%, or 733 points, marking its second biggest one-day point loss ever.

The sell-off was driven by anxiety over a dismal report on retail sales, a bleak outlook by the Federal Reserve and sober remarks by Fed Chairman Ben Bernanke.

A government report showed that retail sales suffered their biggest drop in three years last month. With consumer spending making up two-thirds of GDP, the retail sales data stoked recession fears.

The Federal Reserve's new snapshot of business conditions showed economic activity weakened across all of the Fed's 12 regional districts.

Separately, Bernanke said the government has all the "tools" it needs to fix the problems in the financial and credit markets. But he cautioned that the recovery will take time.

Wednesday's retreat came despite recent steps taken by governments worldwide to free up the credit markets and restore confidence in the financial system.

On the bright side, the credit market continued to show signs of a tentative thaw Wednesday with a decline in a key overnight bank lending rate.

Stocks had rallied Monday as investors cheered the U.S. government's plan to inject fresh capital into ailing banks. But the effects of that plan will not be felt for some time, and investors gave back most of Monday's gains on Tuesday.

Wednesday was also a down day in Europe. Markets in London, Paris and Frankfurt all tumbled nearly 7%.

The CNN Wire reports were used in compiling this article. To top of page

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