Recession fears sweep world markets
European shares tumble. Hong Kong, Japan sink 7%. Bank of England, European Central Bank slash lending rates.
LONDON (CNNMoney.com) -- Recession fears and worries about corporate profits swept stock markets around the world Thursday, but European indexes partly recovered after the Bank of England and European Central Bank slashed lending rates.
U.S. stock futures, which give an indication of how markets will open when trading begins in New York, were lower, but partly recovered from earlier lows.
The Bank of England announced that it would cut its key lending rate by 1.5 percentage points to 3%.
The European Central Bank said it would cut its key lending rate by half a percentage point to $3.25%.
In midday trading, Britain's FTSE 100, the CAC-40 in Paris and Germany's DAX fell about 3%. Before the rate cut, these indexes were down nearly 5%.
The losses in Europe came on the heels of a sharp drop in Asia. Japan's benchmark Nikkei index finished the session down 6.5%. The Hang Seng index in Hong Kong sank 7.8%, and South Korea's KOSPI finished the day 7.6% lower.
The losses were fueled by the latest evidence that the global economic slowdown is significantly affecting corporate earnings.
Toyota (TM) slashed its full-year earnings outlook Thursday, while athletic gear maker Adidas AG canceled its guidance for 2009.
In the U.S., tech giant Cisco (CSCO, Fortune 500) lowered its sales targets for the current quarter and froze hiring. The news, released after the market closed Wednesday, sent the company's shares down 5% in after-hours trading.
The Dow Jones industrials average shed 486 points, or 5%, on Wednesday as recession fears returned front and center following a historic election in the United States that saw Barack Obama elected as the nation's first African-American president.
CNN Wires contributed to this report. 
