Markets in Asia and Europe slumped Friday, tracking losses on Wall Street overnight as investors worried about a possible end to U.S. interest rate cuts and a slowing American economy, reported ap. Hong Kong's benchmark index plunged over 3 percent and markets in Japan, China, South Korea and Singapore fell more than 2 percent. Repeating a pattern seen several times this year, a sharp sell-off in U.S. stocks prompted investors to dump shares in Asian markets, many of which have surged to records in recent weeks. The Dow Jones industrial average tumbled more than 360 points Thursday as investors reacted nervously to surging oil prices and a smaller-than-expected gain in U.S. consumer spending for September. A warning about inflation Wednesday from the Fed when it cut rates also triggered concern that the U.S. central bank might hold off on further rate cuts or even consider raising them if inflation accelerates. That renewing worries about a slowdown in the U.S. economy _ a vital market for Asian exporters. «I'm not expecting a serious sell-off, but I think Asian markets are responding to a genuine change in the overall outlook _ that the Fed is not going to be as aggressive in cutting rates,» said Tim Rocks, Asia Strategist at Macquarie Bank in Hong Kong. «But you'll certainly see a slower pace in gains,» Rocks said. «The Fed's attitude is going to put a lid on markets.» European stocks also fell in early trade Friday, with Britain's FTSE 100 down 1 percent, and France's CAC 40 and Germany's DAX both down 0.8 percent. Japan's benchmark Nikkei 225 index tumbled 352.92 points, or 2.1 percent, to finish at 16,517.48 points, dragged down by financial shares. Mitsubishi UFJ Financial Group dropped 6 percent following a recent revision of its profit outlook on weak domestic lending, while Mizuho Financial Group fell 5.7 percent. Investors were anxiously awaiting U.S. jobless data due out later Friday for more clues about the state of the U.S. economy. Jitters over the fallout from the U.S. subprime mortgage crisis _ which roiled markets in August _ will linger for awhile, traders said. In Hong Kong, the blue chip Hang Seng Index sank 1,024.54 points, or 3.25 percent, to close at 30,468.34. The index is still up 52.6 percent this year. Hong Kong's stock market has surged amid investor demand for shares in mainland Chinese companies and on signs that Beijing plans to allow individual investors from the mainland to buy shares in Hong Kong stocks at some future date. The stunning ascent this year in many Asian markets has been punctuated by occasional drops, usually sparked by plunges on Wall Street, which seem to be taken as cues by invstors to unload shares that may have risen too high, too quickly. So far this year, each time Asian markets have dropped sharply, nearly all have quickly bounced back and climbed higher.
