Global stocks pull back
Most Asian markets end lower, as investors resume worrying about the global economy.
NEW YORK (CNNMoney.com) -- World stock markets pulled back Wednesday as investors reacted to poor U.S. retail sales, which reinforced investors' fears that the multi-billion dollar bank bailout plan would not be enough to prevent a recession.
European markets slumped, giving back Tuesday's gains. London's FTSE-100 fell 7.2%, Frankfurt's DAX tumbled 6.5% and Paris' CAC-40 ended 6.8% lower.
Most Asian-Pacific markets ended lower. Australia's All Ordinaries index finished down 0.9% and Hong Kong's Hang Seng slumped 5%. The Taiwan Weighted index fell less than 1%.
The story was similar in Seoul, where the KOSPI index fell 2%. Singapore's Straits Times index was off 3% and the BSE SENSEX in Mumbai slipped 6%.
Japan's Nikkei index ended up 1.1% after a record 14% surge the day before.
World markets reacted strongly to a U.S. government report indicating that retail sales dove 1.2% in September, almost double analysts' expectations of 0.7%.
"The 1.2% month-on-month slump in retail sales confirms beyond any reasonable doubt that real consumption shrank in the third quarter, the first decline in 17 years," said Paul Ashworth, senior U.S. economist at Capital Economics. "The bottom line is that the economy is now in recession and the downturn is already looking more severe than either of the last two recessions," he added.
Fears about the outlook for the world economy have overtaken the relief the markets breathed at the start of the week on the unveiling of a series of bank rescue packages from governments around the world to restore confidence.
On Tuesday, the U.S. government followed Europe's lead and announced it is to pump some $250 billion into shares of its leading banks, including JP Morgan Chase & Co., Bank of America Corp., Goldman Sachs Inc. and Citigroup Inc. Half of the money, or $125 billion, will go to the nine large banks.
The government also announced insurance on all deposits in non-interest bearing bank accounts, a move that should calm businesses worried because their payroll and checking accounts may exceed the limits backed by the Federal Deposit Insurance Corp.
And the FDIC will also back most new bank debt - a change designed to spur more lending between banks.
The moves did, however, help lift shares in big banks, which have been battered throughout the year. Shares of Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500) and Merrill Lynch (MER, Fortune 500) all soared more than 10% Tuesday.