Markets hit hard in Europe, Asia

Sobering economic news in Europe, combined with continuing concerns about the U.S. economy, shattered markets in Europe and Asia today. The United Kingdom’s benchmark FTSE 100 Index plummeted 6.6% on a government report that the British economy shrank a larger-than-anticipated 0.5% in the third quarter, signaling that the country is heading toward its first recession since 1991. The British pound slid in sympathy, hitting its lowest level against the dollar since 1971. The Dow Jones Stoxx 600 index of European stocks fell 6.2% amid reports from European airlines and other companies of slow growth that could lead them to miss earnings targets. France’s CAC stock index fell 5.6% while Germany’s DAX index was down about 7%. Problems persisted in Russia, where trading on the Micex Stock Exchange was halted until next week, following a 14% decline. Fears have been spreading globally in a daisy chain of concerns. Japan’s core Nikkei index lost 9.6% today while Hong Kong’s Hang Seng Index was off 8.3%. The Dow Jones Industrial Average was down more than 342 points at about 12:35 p.m. ET, with traders worried that hedge funds were selling as they strove to meet investor redemption calls. Credit markets, which earlier in the week showed signs of recovering as banks stepped up lending to each other, following strong coordinated central bank action around the world, also retreated. Treasury prices rose and yields sank, while spreads above Treasuries on the London interbank offered rate — the rate banks charge each other for overnight loans — widened this morning.