(Picture Of Frankfurt Stock Exchange)LONDON: Stock markets tumbled again in Asia and Europe on Wednesday after heavy overnight losses in the United States, as traders remained on red alert for fallout from US housing market woes, analysts said.
Markets faced another fierce sell-off as investors were gripped by renewed concerns over a potential global credit crunch sparked by the troubled US home loan sector.
Shares in Frankfurt, London and Paris fell further on Wednesday, with key casualties among financial companies, after Hong Kong and Tokyo markets had earlier plunged by more than 2.0 percent in value.
Later Wednesday, all eyes will be on Wall Street following a hammering the previous day. US markets open at 1330 GMT.
Traders remain highly sensitive to evidence that the faltering US sub-prime sector -- which supplies home loans to people with poor credit histories -- may have impacted on banks or investment funds around the world.
"Investors are still having a real battle trying to understand who's got the (sub-prime) exposure and what their liabilities are," said Barclays Capital analyst Henk Potts.
"Until we get a better picture on how the problems we've been seeing in the credits markets will affect long-term business, there's going to be this uncertainty."
Experts say that the biggest fear is that US mortgage defaults by sub-prime homeowners will spark tighter global borrowing conditions, thereby weakening consumer spending, corporate activity and world economic growth.
The latest wave of selling, meanwhile, came despite recent efforts by the world's major central banks to restore calm to global markets by pumping billions of dollars of emergency funds into the banking system.
Analysts added that investors were also seeking a safe-haven for their cash amid the apparent meltdown on stock market trading floors.
"Turmoil in the financial markets has returned with renewed volatile price action indicating that market participants continue to shift out of riskier assets reflecting fears over the fallout in global credit markets," said Derek Halpenny, economist at The Bank of Tokyo-Mitsubishi in London.
London's FTSE 100 index of leading shares was 0.83 percent lower at 6,092.50 points near the half-way stage on Wednesday.
The FTSE has seen stormy trading in recent days. Last week it shed 2.99 percent in value -- but rebounded by the same percentage on Monday.
However, losses on Tuesday and Wednesday have almost erased those gains amid worries that the current equities downturn could dampen global economic growth.
Elsewhere Wednesday, Frankfurt's DAX 30 fell 0.65 percent to 7,376.59 points and the Paris CAC 40 slumped 1.28 percent to 5,408.71.
Adding to jitters, reports said a US investment firm, Sentinel Management Group, had frozen a 1.5 billion dollar fund because it has been overwhelmed by investors trying to withdraw their money.
And Japanese megabank Mitsubishi UFJ Financial Group said it had suffered about 43 million dollars in losses on US sub-prime loans, sending its shares sharply lower.
The Tokyo market buckled earlier Wednesday after two days of relative calm that had raised hopes that markets might have finally hit a bottom after recent plunges.
Japan's benchmark Nikkei-225 index slumped 2.19 percent to an eight-month low of 16,475.61 points. Hong Kong's key Hang Seng Index closed down 2.87 percent at 21,375.72.
Dealers said that although Asia's exposure to the US mortgage problems appeared to be limited, the fear is that foreign funds will be forced to sell Asian stocks to cover losses on subprime loans to risky borrowers.
"Things are still very shaky in the States and that's really driving a lot of the concerns at the moment," said Lorraine Tan, vice president of Asia equity research at Standard and Poor's in Singapore.
"The markets haven't stabilised yet. Unless there's some sign of things stabilising it's still going to be very volatile," she said. - AFP/ir
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