World markets slide on economic fears

Obama's daunting tasks

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(CNN) -- European markets opened solidly in negative territory Wednesday, following earlier selloffs across Asia and on Wall Street.

By mid morning, London was off 1.7%, Paris had shed 2.3% and Frankfurt lost 2.1%.

Layoffs at telecommunications company Ericsson (ERIC) help reinforce traders' pessimism about the economy. The Swedish-based firm said it was cutting 5,000 jobs as part of cost-reducing measures.

Asian and Pacific markets posted wide-ranging losses. With continuing banking woes in Japan, Tokyo's Nikkei index closed below 8,000, sinking 2% to 7,902. Seoul's KOSPI index dropped 2.1%.

Australia's All Ordinaries Index dropped 0.9% on additional signs of a weakening economy.

BHP Billiton (BHP), the world's largest mining company, announced production cuts at several of its operations that will result in nearly 6,000 employees being laid off, mostly contractors. The multinational has home offices in Melbourne and London.

Hong Kong's Hang Seng index took the biggest hit, falling about 2.9%.

China's Shanghai composite index fared better, however, but still lost half a percent.

In New York on Tuesday, stocks slumped to two-month lows as investors looked beyond President Obama's historic inauguration to the battered economy he inherits.

The Dow Jones industrial average lost 4%, closing at the lowest point since November 21. The Standard & Poor's 500 index lost 5.3% and the Nasdaq composite lost 5.8%.

Although Obama is a positive for the markets, his inauguration does not change the underlying issues, said Phil Orlando, chief equity market strategist at Federated Investors.

"Fourth-quarter earnings are a disaster," he said. "The numbers are poor, there are kitchen-sink writedowns and management is providing conservative or negative guidance."

Earnings are currently on track to have fallen 20.2%in the fourth quarter from a year earlier, according to the latest Thomson Reuters figures.