Stocks across the world tumbled yesterday as investors reacted to a growing likelihood the United States and its allies will intervene militarily in Iraq without the approval of the UN Security Council.
The Dow Jones fell to 7,568.18 and the Nasdaq shed 2.05 per cent to 1,278.47 at the closing bell. The Standard and Poor's 500 fell 2.58 per cent to 807.54.
"Every day it's another 100 points," said Mr Alfred Kugel, senior investment strategist at Stein Roe, referring to the downward drift of the market. "The march toward war has gotten a day shorter.
"It looks like it's going to come between the end of this week and the end of this month.
"Now that the Russians are going to veto the UN resolution and I assume the French as well,there is nothing more to be done in the UN. The signal will be given and we'll go ahead."
Leading European shares fell to six-year lows sparked by withering confidence in insurers such as Swiss Life and jitters about the growing prospect of a war against Iraq depressed sentiment.
Deutsche Telekom was hammered after posting the largest net loss in German corporate history.
The Irish Stock Exchange bucked the trend with a rise of 0.37 per cent to on a day when most business was in its leading names.
"It's death by a thousand cuts at the moment," said Mr Rupert Thompson, global equity strategist at E*TRADE Securities. "The market is caught between on the one hand a resolution no matter what it is, and on the other hand the US and the UK going alone. That will dominate this week so my guess is the markets will go down this week," he said.
By late afternoon the FTSE Eurotop 300 index was down 2.2 per cent at 707.32, a level not seen since January 3rd, 1997.
The narrower DJ Euro Stoxx 50 index fell 2.6 per cent to 1,940.49.
The insurance sector bore the brunt of the selling, hit by ebbing confidence in the sector as declining stock markets erode the value of insurers' equity investments.
"These (insurance) stocks are very highly geared to the market and when the market falls they come right down with it and vice versa," said one analyst.
Swiss Life fell 20 per cent after the insurer warned last week it would post a loss double analysts' estimates.
Meanwhile, Japan yesterday set the stage for co-ordinated action by the finance ministry and the Bank of Japan to support the stock market and weaken the yen.
The move came after the Nikkei closed at a 20-year low and the currency reached a six-month high against the dollar.Senior politicians, bureaucrats and businessmen called for action to support share prices to stave off a possible financial crisis triggered by the exposure of banks and other companies to the market ahead of the end of the financial year. - (Reuters, Financial Times Service)
