Recession fears pull down Asian stocks

Business Materials 12 November 2008 11:31 (UTC +04:00)

Recession fears weighed on Asian and Pacific markets for a second straight day, taking most indices lower despite a new U.S. government plan to help homeowners, reported CNN.

Japan's Nikkei index finished down 1.3 percent, while the KOSPI in Seoul was off about half a percent.

Australia's All Ordinaries index slipped a percent. In Hong Kong, the Hang Seng shed 1.9 percent.

On Wall Street, those recession fears trumped a new government and mortgage industry plan to help troubled homeowners.

The Bush administration's mortgage modification plan focuses on Fannie Mae and Freddie Mac -- which own or back a combined $5 trillion in mortgages. However, the plan does not provide any direct financial help from the U.S. government.

The Dow Jones industrial average lost 176 points, or 2 percent, after being down as much as 310 points earlier and recovering to within a few points of the break-even line. The Standard & Poor's 500 index and the Nasdaq composite both shed 2.2 percent.

General Motors and Ford Motor continued to slide on worries that the companies won't be able to stay afloat without government intervention.

GM plunged to a 65-year low after it said it will idle an additional 1,900 jobs on top of those already announced. On Friday, GM posted a steep loss and said it is running out of cash. Ford Motor shares slumped, too.

Both companies, along with Chrysler, are seeking help from the U.S. government. On Tuesday, President-elect Barack Obama told President Bush that the automakers needed more federal help, according to his aides.

"Between the automakers and the financials, bad news continues to dominate," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

Late Monday, Starbucks reported weaker earnings and higher revenue, both of which missed estimates. Shares declined modestly Tuesday.

Despite all the bad economic news, U.S. futures, which offer an indication of how markets may open when trading begins in New York on Wednesday, were higher.

In global trading, major indexes in Europe ended lower on Tuesday.

Britain's FTSE 100 fell 3.6 percent, and France's CAC-40 slid 4.8 percent and the DAX in Germany lost 5.3 percent.