US presidential election euphoria gave way to fears of a deep and protracted recession in the world's largest economy, forcing markets down worldwide. European stock markets traded down Thursday after heavy sell-offs on Wall Street and Asia despite interest rate cuts across the continent, including a much bigger than anticipated reduction from the Bank of England. The FTSE 100 index of leading British shares was down 167.72 points, or 3.7 percent, at 4,363.01, while Germany's DAX was 211.66, or 4.1 percent, lower at 4,955.21. France's CAC-40 was down 127.33 points, or 3.5 percent, at 3,490.78. Except for some volatility after the interest rate cuts from the Bank of England and the European Central Bank and an unscheduled reduction by the Swiss Central Bank, Europe's stock indexes were still more or less at the level they were before the decisions. While the Bank of England slashed its benchmark rate by 1.5 percentage points to 3.00 percent, its biggest cut since March 1981, the European Central Bank and the Swiss National Bank opted for more modest half-point reductions. “Traders are thinking, if we've really got to cut rates to 3 percent, then how bad is it out there,” said Mic Mills, senior trader at ETX Capital. “Recessionary fears were bad before; they just got a whole lot worse,” he added. Europe's indexes had already been lower in the wake of hefty losses Wednesday on Wall Street overnight and in Asia earlier in the day as investors fretted about the global economy. The Dow Jones industrial average fell 486.01, or 5.1 percent, to 9,139.27, while the Standard and amp; Poor's 500 index shed more than 5 percent. It's not expected to get much better later, with stock futures down. Dow futures were down 107 points, or 1.1 percent, at 9,070, while S and amp;P futures were 12.9 points, or 1.4 percent, lower at 945.1. Japan's Nikkei stock average down 6.5 percent at 8,899.14, and Hong Kong's Hang Seng Index 7.1 percent lower at 13,790.04. South Korea's benchmark Kospi index broke a fi ve-session winning streak to dive 7.6 percent. Markets in Singapore, Australia and mainland China also dropped sharply. Stocks around the world have enjoyed a strong rally over the last week or so, partly on relief that the US presidential election was coming to an end. However, investors know that President-elect Barack Obama will have his work cut out to improve the US's immediate economic prospects and that Inauguration Day is still more than two months away. Further proof of the scale of the downturn in the world's largest economy came Wednesday with the news that the US service sector contracted sharply in October as new orders and employment fell. The Institute for Supply Management, a trade group of purchasing executives, says the services sector index fell to 44.4 in October from 50.2 in September. Analysts had anticipated a far more modest drop.
