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US stocks open lower as overseas markets slide

US stocks open lower as overseas markets slide

Wall Street opened lower Monday after stock markets around the world tumbled further on worries about the global economy.
News that the U.S. Treasury plans to start distributing money to major banks this week is offering investors some room for optimism, even as economic worries remain. But investors are worried that the credit crisis has hurt the world's economy.
A surge in the yen illustrated investors' nervousness about how much economic activity could slow. Japan's Nikkei 225 index dropped to its lowest close in 26 years as investors worried that the high yen will hurt Japanese exports and further disrupt economic activity. The currency moved to the 93 yen level and near 13-year highs. The yen is seen as a safe haven holding for investors who contend the Japanese economy will fare better in a global recession.
The Nikkei fell 6.4 percent to its lowest level since October 1982, while Hong Kong's Hang Seng Index tumbled 12.7 percent, its lowest finish in more than four years and its biggest single-session drop since 1991.
The sell-off came even as the seven leading industrial nations on Sunday issued a statement warning about the "recent excessive volatility" in the value of the yen. The G7 said it would "cooperate as appropriate," stirring speculation of an orchestrated intervention to help stabilize currency markets.
Selling spread to Europe when markets opened there. In afternoon trading, Britain's FTSE 100 fell 1.63 percent, Germany's DAX index lost 2.57 percent, and France's CAC-40 declined 4.91 percent.
Wall Street appeared comforted by the Treasury's announcement that it signed agreements with nine banks and will buy stock in the companies this week. The proceeds from the stock sales are intended to bolster the banks' balance sheets so they will begin more normal lending and help ease the continuing credit crisis.
More action from the government is expected Tuesday and Wednesday. The Federal Reserve holds a regularly scheduled two-day meeting that is prompting speculation that the world's major central banks could announce coordinated rate cuts. The Fed had already been expected to lower its fed funds rate by a half-point to 1 percent on Wednesday.
The ongoing selling is due in part to the belief that a worldwide recession is likely inevitable, but it's also being triggered by hedge funds and other investors unloading stock because they're being hit by margin calls. In a margin call, a broker who lent money to an investor calls in the loan, forcing the investor to sell stock to repay the loan.
In the first half-hour of trading, the Dow Jones industrial average fell 74.47, or 0.89 percent, to 8,304.48.
Broader stock indicators also fell. The Standard & Poor's 500 index declined 7.59, or 0.87 percent, to 869.18, and the Nasdaq composite index fell 15.16, or 0.98 percent, to 1,536.87.
On Friday, stocks ended at their lowest point in five years, but not at their worst levels of the session. The Dow fell 3.59 percent, the S&P 500 index fell 3.45 percent, while Nasdaq declined 3.23 percent.
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Updated : 2021-08-03 19:59 GMT+08:00