Stock Slide Amid Fears

NEW YORK (AP) - Stock markets around the world plummeted Friday
and oil prices plunged to their lowest in more than a year. Even
gold, the traditional safe haven in times of panic, fell sharply.

The common denominator was growing fears that governments,
central banks and finance ministers seem powerless to stop the
deepening of a global recession that will slam corporate earnings
and lead to deep job losses around the world.

The Dow Jones industrial average dropped more than 330 points in
morning trading. Before the open of New York trading, Dow futures
had dropped 550 points, triggering a temporary trading halt in
stock futures contracts in an effort to slow the decline. If the
Dow drops 1,100 points before 2 p.m. the New York Stock Exchange
would be forced to use "circuit breakers" that could lead to
temporarily shutting the market, something it hasn't done since

"This is beyond volatile: It is chaotic," Carl Weinberg, chief
economist at High Frequency Economics wrote in note to clients.
"This is the kind of day when the central banks step into the
market with an 'unexpected' interest rate move to calm things

Treasury Secretary Henry Paulson is monitoring the markets and
staying in close touch with market participants, a spokeswoman

Oil fell sharply and traded near $63 a barrel amid weakening
global demand for crude - despite a decision by the OPEC cartel to
cut production quotas by 1.5 million barrels a day from next month.

The dollar plunged below 93 yen, a 13-year low. Gold fell as low
as $681 an ounce, its lowest since January last year.

It was already a black Friday overseas. Japan's Nikkei stock
average dropped 9.6 percent. Germany's benchmark DAX index plunged as much as 10.8 percent, France's CAC40 slid 10 percent and
Britain's FTSE 100 shed 8.7 percent.

"We are getting used to wild swings in the markets, but today's
moves verge on the bizarre," said Julian Jessop, chief
international economist at Capital Economics.

The only good news was the 5.5 percent increase in September
existing home sales. Median home prices, however, dropped to
$191,600, down 9 percent from a year ago.

The U.K.'s third quarter gross domestic product fell 0.5
percent, with the steepest decrease in 18 years putting the country
on the brink of recession. Shares of Japan's Sony sank more than 14
percent when it slashed its earnings forecast for the fiscal year.
In Germany, Daimler's stock dropped 11.4 percent in morning
trading; it reported lower third-quarter earnings and abandoned its
2008 profit and revenue guidance.

Emerging market economies and currencies are coming under
extreme pressure. Investors are pulling money out of countries in
Eastern Europe, Latin America and Asia on fears vulnerable
countries will not only be hit hard by the financial crisis but may
also default on debt.

Hong Kong's Hang Seng index fell 8.3 percent and markets in
India, Thailand, Indonesia and the Philippines were also down

Brazilian stocks slumped for the fourth straight day, with the
Ibovespa index down 3.9 percent in midday trading. Mexico's
benchmark index was down 6 percent.

"Periods of panic punctuated by occasional calm appears to be
the manner of things for now," said Daragh Maher, a strategist at
Calyon Corporate and Investment Bank in London.

Investors around the world seemingly have become more convinced
the global economy is on the brink of a long and painful recession,
if it's not already in one.

Over the past few weeks, governments have taken unprecedented
steps to thaw frozen credit markets and avert the downturn. But
while there are signs that credit markets are beginning to thaw -
rates banks charge each other for short-term loans have been
falling in recent days - the outlook from companies reporting
earnings are almost universally cautious about their prospects
going forward.

That means companies will be reluctant to buy new equipment or
hire new workers. U.S. unemployment claims, already well into
recession territory, are rising even faster than expected.
Economists warn the worst is yet to come.

On Thursday, the government said new applications for
unemployment insurance rose 15,000 last week to a seasonally
adjusted 478,000, above analysts' estimates of 470,000. Jobless
claims above 400,000 are considered a sign of recession.

Goldman Sachs, Chrysler and Xerox all announced they were
cutting workers by the thousands, adding to the woes of an economy
beset by tighter credit and wobbly banks. Chrysler said it would
cut about 5,000 salaried workers, one quarter of the company's
18,500-person white collar work force.

PNC Financial Services said it is acquiring National City bank
for $5.8 billion and planned to receive $7.7 billion in capital
from the federal government as part of its $700 billion financial
rescue plan.

The White House, in unusually stark language, acknowledged
Thursday the economy is going through what spokeswoman Dana Perino called a "rough ride."

"We expect our GDP (gross domestic product) number next week
not to be a good one and the next quarter to be tough as well,"
Perino said.

The Commerce Department will release its first estimate of
third-quarter economic performance Oct. 30, and Wall Street
analysts project it will show the economy contracted by 0.5
percent, according to Thomson/IFR.

Many economists expect the decline to continue into the current
quarter and the first three months of 2009, if not longer. The
classic definition of a recession is at least two consecutive
quarters of negative growth.

Former Federal Reserve Chairman Alan Greenspan, testifying
before a House committee, said he could not see "how we can avoid
a significant rise in layoffs and unemployment."

The apparently universal gloomy outlook was feeding the selling.

The Standard & Poor's 500 was down 33.29, or 3.6 percent, to
874.82. Sam Stovall, S&P's chief investment strategist, put a 700
target on the index, saying S&P's equity analysts expect operating
results for the 500 large companies to decline 10 percent in 2008.


Associated Press writers Stevenson Jacobs in New York, Louis
Watt and Carlo Piovano in London and Martin Crutsinger, Christopher
S. Rugaber and Marcy Gordon in Washington contributed to this

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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