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2010-05-25 11:48:35
Global stock markets fell heavily on Tuesday over continued fears about the debt problems in the eurozone.
In early trade in Europe the FTSE 100 in London was down by 2.60%, Germany's Dax index was 2.34% lower, while in France the Cac 40 index slid 2.74%.
It came after shares in Asia had seen sharp falls. Stocks in South Korea and Japan had been affected as North Korea reportedly went on to military alert.
Japanese stocks fell by 3.1%, and shares in South Korea fell by 2.7%.
In London, the FTSE 100 has fallen by more than 10% in little more than a month after hitting a 22-month high in April.
Regional tensions
Earlier in Asia, Australian shares fell by 3%, Taiwanese stocks were down 3.23% and the wider MSCI measure of Asia-Pacific shares outside of Japan fell by 3.6%.
Shares in Hong Kong, Singapore, Indonesia, China, India, Thailand and Malaysia all fell too.
FTSE 100 INDEX
Last updated: 25 May 2010, 10:32 UK
FTSE 100 intraday chart
value change %
4929.02 -140.59 -2.77
More data on this stock index
There were reports in South Korea that North Korea had told its military to prepare for war, but only if the South attacks it first.
Tensions in the region have been growing since international investigators blamed the North for torpedoing and sinking a South Korean warship in March, killing 46 sailors.
'Toxic cocktail'
Other factors increasing pessimism among investors were the weekend rescue of Spanish bank Cajasur by Bank of Spain, only the second time the central bank had saved a regional lender.
"The toxic cocktail worsens," said Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers.
"Continuing fears over the European debt situation stalling the global economic recovery has been exacerbated by the potential of military tensions in Korea."
EURO V US DOLLAR
Last updated: 25 May 2010, 10:46 UK
EUR:USD intraday chart
1 buys change %
1.2208 -0.0164 -1.32
More data on this currency pair
And he said there was a shortage of buyers prepared to commit to the market at the present time.
The continued weakness of the euro is a concern, with investors dumping the currency on fears that debts will cause defaults by weaker countries in the European Union.
In Tuesday trading the euro stood at $1.2237, after earlier falling as low as $1.2218 dollars.
And the euro stood at 0.8564 against the pounds, compared to 0.8587 at close on Monday.
"The euro problems are very deep-rooted as eurozone members share a common currency but fiscal policies are left to each country," Japanese Finance Minister Naoto Kan told reporters.
"I hope financial markets will calm down gradually."
The falls in Asia come after major markets in the US closed lower overnight, with the Dow Jones shedding 1.2% and the S&P 500 dropping 1.3%.