Global stock markets take another beating

World equity markets spiralled lower Monday as Asia and Europe took their cue from a pre-weekend Wall Street slump sparked by renewed US economic fears, credit concerns and record high oil prices.
Investors were rattled by a steep US decline on Friday, when worries about the outlook for the world's largest economy grew amid poor earnings news on the 20th anniversary of the New York market crash.
Elsewhere Monday, the record-breaking European single currency hit a record high 1.4347 dollars. A strong euro makes eurozone exports more expensive for buyers using weaker currencies, and therefore weighs on European shares.
Frankfurt, London and Paris stock markets slid by about 1.50 percent in European mid-morning deals on Monday. Earlier in Asia, Tokyo tumbled 2.24 percent and Hong Kong slumped 3.7 percent.
Global finance chiefs said over the weekend that the recent financial market turbulence, high oil prices and a US housing downturn were likely to "moderate" global growth from its recent robust levels.
"Investors have been spooked by three main things," said Barclays Capital analyst Henk Potts on Monday.
"Number one is concern that the problems we have been seeing in the credit market could last longer than originally hoped, and number two is the oil price reaching record levels last week.
"Number three was some disappointing numbers from Caterpillar, which was a sign that the problems we have been seeing are starting to affect the corporate picture."
Potts added that global stock markets were still in positive territory for the year -- despite the fresh downturn.
On Wall Street before the weekend, the Dow Jones index lost a hefty 2.64 percent on Friday after several major companies reported soft earnings and showed caution about the profit outlook.
Caterpillar, the US maker of heavy equipment which is regarded as highly sensitive to global economic conditions, offered weak guidance going forward.
"Uncertainty about the prospects for the US economy have increased after disappointing earnings amid the credit tightening concerns," said Kazuhiro Takahashi, equity general manager at Daiwa Securities SMBC.
The market has been sensitive to the financial sector given recent US credit market problems. A weak earnings report from banking giant Wachovia, which offered murky guidance going forward, added to market worries.
The dollar also suffered fresh losses after Group of Seven finance chiefs refrained from voicing increased concern about currencies, which markets took as a green light to drive the greenback to another record low against the euro.
The yen shot higher, hitting Japanese exporter shares, as the latest stock market rout prompted investors to unwind risky bets funded by selling the Japanese unit.
Japanese exporters have benefitted greatly from the weakness of the yen, so investors react nervously to any sign of the currency appreciating.
Wall Street's steep decline Friday sent "shockwaves" through the South Korean market, said Lim Dong-Min, a stock analyst at Dongbu Securities.