Asian Stocks Open Lower After Bad Day on US and European Markets

Posted August 10th, 2011 at 9:00 pm (UTC-5)
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Asian stocks opened lower after U.S. and European share prices dropped on news about sluggish global economies.

Seoul's KOSPI index opened 3 percent lower Thursday while Tokyo's Nikkei was down nearly 2 percent. Sydney's main indicator opened more than 1 percent lower.

Concerns about weak U.S. economic growth and worries about European debt had sent U.S. and European stocks plunging on Wednesday.

In New York, the Dow Jones Industrial Average fell almost 5 percent while the S&P and NASDAQ indexes also were down sharply — giving back all the gains from Tuesday's recovery from a Monday sell-off.

Major European indexes in London, Paris, and Frankfurt also fell as much as 5 percent as reports surfaced that France might lose its top AAA credit rating. Later in the day, the three major credit rating agencies affirmed France's AAA rating.

Also Wednesday, the Fitch rating agency downgraded Cyprus government bonds two notches, following similar moves last month by Moody's and Standard & Poors. Fitch also said Cyprus may have to seek an international economic bailout.

The decline in Europe and the United States ended a strong stock rally Tuesday after top officials of the U.S. central bank said they probably will keep interest rates at their current ultra-low level until the middle of 2013.

The U.S. Federal Reserve's record-low interest rates are intended to make it easier to borrow money, expand businesses and hire people. Fed officials said they are worried that the nation's economy is recovering more slowly, and that the labor market is weaker than expected.

Tuesday's Federal Reserve meeting followed several days of steep losses on stock markets around the world, and Friday's downgrade of U.S. credit by the Standard & Poor's rating agency. Central bank officials said they discussed other policy options to boost the economy, and are ready to use them if needed.