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Europe caught in Wall St tailspin

A Wall Street trader watches and waits
A Wall Street trader watches and waits  

LONDON, England -- European markets have been caught in the downdraft wrought by the ongoing crisis of confidence in American corporate business.

Bourses in European capitals were pummeled on Thursday, after news telecoms giant Qwest became the latest American corporate giant to face a probe into its finances.

The news rocked Wall Street, sending the Nasdaq and S&P500 share index diving to fresh five-year lows on Wednesday. (Full Story)

The Nasdaq fell 35.11 to 1,346.01, the lowest close for the tech-laden index since May 19, 1997. The S&P500 index also sank 32.36. or 3.4 percent, to 920.47, its lowest close since November 1997.

Downgrades of U.S. automakers Ford and General Motors also helped shatter the Dow Jones industrial average. It tumbled 282.59 to 8,813.50, a 3.1 percent drop that left the world's most widely watched stock index at its lowest close in more than nine months.

Asian markets also tumbled in the wake of the Wall Street sell-off, with Tokyo's main stock index losing 2.5 percent 10,485.74 -- matching Nasdaq's decline on Wednesday.

U.S. markets were mixed in early trading on Thursday, which helped lift European markets off their lows.

London's FTSE index initially plunged 3.5 percent at one point on Thursday, hitting a five-year-low as 36 billion ($55.8 billion) was wiped off share values. By 1500 GMT the index was down 118 points, to 2.8 percent, to 4,300 (Report) after sliding more than 120 points on Wednesday.

The CAC 40 bourse in Paris hit lows not seen for three-and-a-half years while markets in Frankfurt, Amsterdam, Milan, Stockholm, Madrid and Oslo all fell by between 2 and 3 percent. (Full Story)

The French CAC has been hit by its own financial scandal revolving around Vivendi, despite the media giant appointing a new chief executive following the ousting of Jean-Marie Messier. (Vivendi probe)

The Commission des Operations de Bourse (COB) sent a team of investigators to Vivendi's headquarters on Tuesday to examine its books -- sending Vivendi's shares down 6.6 percent.

Road sweeper
A London roadsweeper glances at a FTSE stock market graph depicting trade during July  

World markets have been in a tailspin since investor confidence was shaken by a string of accounting scandals among U.S. corporations like Enron, WorldCom and Global Crossing.

A speech by U.S. President George W. Bush earlier this week aimed at restoring investor confidence by clamping down on fraud failed to stimulate the markets. (Bush speech reaction)

The impact of the message was weakened when accounting concerns returned to the White House.

A public interest group sued U.S. Vice President Dick Cheney and the oil services company he once ran, Halliburton Co, alleging they defrauded shareholders by overstating the company's revenues. (Full story)

Doubts have arisen over the accounts reporting practice undertaken by a company Bush was linked to in the 1990s, though his office has denied any wrongdoing.

Gerhard Schwarz, head of portfolio strategy at HVB bank in Frankfurt, told The Associated Press: "You have a lack of confidence in economic data."

Antony Mak, an sales director with DBS Vickers Ballas, in Hong Kong, added: "As long as Wall Street continues to decline, no world markets can be spared."

Asian markets were also sensitive to fears that a stalling U.S. economic comeback could undermine demand for the region's exports.

Tokyo's Nikkei Stock Average closed down 266.92 points, or 2.48 percent, at 10,485.74.

The Bank of Japan Governor Masaru Hayami said the unstable U.S. financial markets were clouding the direction of the Japanese economy, AP quoted him as saying.

Justin Urquhart Stewart at Seven Investment Management told the UK's Press Association: "We are in a state of a buyers' strike. Any ordinary news is magnified. Confidence is easily lost and hard won and we could be in this cycle for the next year."


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