World shares slump amid Japan fears
Published 15/03/2011 | 16:00
Stocks plunged on both sides of the Atlantic today as the growing nuclear crisis in tsunami-hit Japan sparked a global shares sell-off.
Fears over dangerous levels of radiation leaking from a crippled nuclear plant in Japan sent the Dow Jones Industrial Average slumping nearly 300 points after trading opened on Wall Street.
The Dow Jones later pulled back to stand 230 points, or 1.8pc, lower, helping the FTSE 100 Index ease to a 1.7pc decline.
The Footsie had dropped as much as 3pc in early trading after panic selling sent the Nikkei 225 in Tokyo tumbling 14pc before eventually finishing the session down 10.6pc.
Japan's leading stock market has now suffered the worst two-day fall since the 1987 stock market crash.
European indices were among the hardest hit elsewhere amid worries that Japan's earthquake and tsunami may impact the supply chains of global car and technology manufacturers.
The Dax in Germany plummeted 4pc and France's Cac 40 was 3pc down as investors dumped shares in companies that rely on Japanese suppliers for parts.
Shareholders worldwide have fled from riskier assets in favour of safer havens such as gold after a radiation leak was detected at the Fukushima power plant, which has suffered a series of explosions after systems failed in the face of the 9.0-magnitude earthquake and subsequent tsunami in north east Japan.
Analysts said it was likely that large Japanese investors, such as insurance companies and hedge funds, were also pulling money from overseas and repatriating it ahead of the country's mammoth rebuilding task.
In currency news, the pound dropped against the US dollar, with the nuclear concerns triggering a flight to stronger currencies.
London's Footsie, which fell almost 1pc yesterday, was put under further pressure by ongoing unrest in the Middle East and key oil-producing nations.
Bahrain declared martial law amid protests in the capital, while battles in Libya raged on.
Joshua Raymond, market strategist for City Index, said: "The markets are now in correction mode and enduring some of the worst sessions seen for some time.
"To see the Nikkei lose as much as 14pc this morning at one point has sent a shiver down the spines of European traders who were already concerned with the tensions in North Africa and the Middle East, whilst European debt problems remain on the horizons."
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, added: "The possibility of repatriation of funds by Japanese investors from abroad is a further drag on share prices, where sellers are currently pushing against an open door. Sentiment is likely to remain fractious until equilibrium can be restored."
Miners led the FTSE 100 lower on concerns for the global economic recovery and its impact on demand.
Among individual stocks, luxury goods firm Burberry dropped another 1pc on fears over a major hit to revenues from its key Japanese market. Shares were down 4pc last night.
Energy and mining engineering company Amec, which provides services to the nuclear sector, also continued to fall, down 1pc.
The stock sell-off in Tokyo hit nearly every business sector, with power companies under intense pressure. Tokyo Electric Power, which operates the crippled nuclear plant, slumped 25pc and Toshiba, a maker of nuclear power plants, fell 19pc.
Even those stocks that did well yesterday due to expectations that they would benefit from Japan's rebuilding programme tumbled.