LONDON (AP) - World stock markets fell Thursday amid pessimism about the Obama administration's plans to fix the U.S. banking system and restore the overall health of the world's largest economy. European stocks were also undermined by a raft of disappointing earnings.
The FTSE 100 index of leading British shares fell 58.82 points, or 1.4 percent, to 4,175.44, while Germany's DAX declined 96.81 points, or 2.1 percent, to 4,433.28. The CAC-40 in France was 45.08 points, or 1.5 percent, lower at 2,982.64.
Sentiment in Europe, already depressed by further losses in Asia earlier, was hit by the news that a number of companies across the continent reported worse than expected earnings and predicted further difficulties for the months ahead.
In Britain, drinks maker Diageo warned that its profits for the 2008-9 fiscal year would be lower than previously anticipated because of the global economic slowdown, while BT PLC, the telecommunications company, issued its fourth profit warning in the space of just six months as a result of further one-off charges.
Meanwhile in France, EDF, the world's biggest nuclear reactor operator, reported a 40 percent drop in net profit last year, due mainly to a provision related to changes in the regulation of power rates. And carmaker Renault SA swung into the red in the second half of the year and said it expected the outlook to darken further this year as the economic crisis continues to ravage car sales.
"There are no green shoots of recovery; with profit warnings, continuing bad news on the global economy, there is a risk that equity markets will continue to lose ground," said Neil Mackinnon, chief economist at ECU Group.
The raft of grim corporate news in Europe comes as the markets have largely given the thumbs-down to the passing of a $789 billion stimulus bill in Congress and U.S. Treasury Secretary Tim Geithner's bank rescue plan, which could cost up to $2 trillion. On the Geithner plan, investors worried about the lack of detail, specifically the absence of any indications about how the banks' toxic assets would be bought.
"Policymakers will argue these details will be hammered out over time, but in the meantime the economic and financial black hole will potentially deepen, and for markets this means risk aversion will likely remain elevated," said Daragh Maher, an analyst at Calyon Credit Agricole.
That risk aversion was certainly evident in Asia earlier, where Japan's Nikkei stock average tumbled 240.58 points, or 3 percent, to 7,705.36 - the lowest in nearly three months. The Nikkei's losses were accentuated by the fact the markets had been closed on Wednesday for a national holiday.
Meanwhile, Hong Kong's Hang Seng lost 310.91 points, or 2.3 percent, to 13,228.30, while South Korea's Kospi lost 0.9 percent despite another rate cut from the country's central bank. Shanghai's main index was off 0.6 percent and Taiwan's benchmark retreated 2.4 percent. However, Australia's key stock measure gained 1.2 percent.
Shanghai's market came off lows late in the session after Aluminum Corp. of China, the world's biggest aluminum producer, announced it was investing some $19.5 billion in global miner Rio Tinto Group - China's biggest overseas investment ever. The state-controlled Chinese company, also known as Chinalco, will take a bigger stake in the Australian firm by setting up a joint venture and purchasing convertible bonds.
The deal, coming at a time when China's economy is being squeezed by the global economic crunch, reflects Beijing's determination to line up future resources it needs to sustain economic growth. It will also help Rio Tinto pay down some of its nearly $39 billion in debt.
The company's shares jumped 5.6 percent in Shanghai, but lost 4.8 percent in Hong Kong. Shanghai and Hong Kong price moves often differ, with mainland China's markets strongly reflecting local sentiment because they are largely closed to foreigners.
Oil prices fell slightly, with light, sweet crude for March delivery down 60 cents at $35.54 a barrel in electronic trade on the New York Mercantile Exchange. The contract shed $1.99 to settle at $35.94 a barrel on the New York Mercantile Exchange on Wednesday.
In currencies, the dollar dropped 0.4 percent to 90.31 yen while the euro fell 0.7 percent to $1.2808.
Pages: 
Obama elected President (Read 620,257 times)
