European and Asian stock markets slumped Friday after sharp losses on Wall Street overnight and as Britain officially joined a growing list of rich nations in recession.
Britain is in recession for the first time since 1991 after its economy shrank during the final two quarters of last year as a global financial crisis raged, official data showed on Friday.
The generally-used technical definition of a recession is two quarters running of negative economic growth.
In trade following the data, London's FTSE 100 index of leading shares was down 1.40 percent, Frankfurt's DAX 30 showed a loss of 2.15 percent and in Paris the CAC 40 had shed 2.01 percent.
"The FTSE continued to struggle after GDP figures proved we are now in a technical recession. This is no secret and had been predicted for some time," said City Index market strategist Joshua Raymond.
"What was important is that GDP figures showed a bigger contraction than anticipated and this was enough to bring in the sellers on mass pushing the FTSE index through the 4,000 (points) level."
The Office for National Statistics said that gross domestic product (GDP) had shrunk by 1.5 percent in the fourth quarter of 2008 compared with the previous three-month period, when it contracted by 0.6 percent.
In Asian trade on Friday, Japanese share prices tumbled 3.81 percent, hit by overnight losses on Wall Street and Sony's forecast of a record loss, dealers said.
Sydney meanwhile shed 4.1 percent following weak US leads and news the nation's three main export economies were softening. Hong Kong closed down 0.6 percent, Seoul gave up 2.1 percent and Shanghai slid 0.71 percent.
"The short-term outlook for (Australian) shares remains highly uncertain," said Shane Oliver, chief economist at AMP Capital Investors.
"The difficult global economic and profit outlook mean that falls to new lows are a high risk."
The US House of Representatives will next week vote on an 825-billion-dollar bill, which supporters say may save the battered US economy from sliding into depression.
New US President Barack Obama has decided top advisors will give him a daily economic crisis briefing as he attempts to shore up the ailing US economy.
US stocks had tumbled Thursday on investor concerns over increasing unemployment and the housing market slump as well as company earnings' pessimism, traders said.
The Dow Jones Industrial Average shed 1.28 percent, the tech-heavy Nasdaq slumped 2.76 percent and the broad-market Standard & Poor's 500 index dropped 1.52 percent.
US markets were gripped by renewed caution after jobless claims jumped and housing starts and building permits plunged, "reinforcing the view that the economy remains mired in a steep recession," said analysts at Charles Schwab & Company.
The Labor Department had Thursday said the number of new US unemployment claims shot up to 589,000 in the past week, matching the highest level in more than 26 years.
Construction starts on new US homes and housing building permits also fell in December amid a deepening housing crisis and recession, the Commerce Department said.
The number of housing starts tumbled 15.5 percent in December from the previous month to an annualized rate of 550,000 units, it said.
"Potential homebuyers are highly unlikely to purchase a home if they are worried about their job and income prospects," said economists at Deutsche Bank Securities.
Negative market sentiment Thursday also stemmed from the technology sector, where bellwether Microsoft underscored sector concerns by posting disappointing quarterly earnings and revenue results.
Microsoft said Thursday net profit fell by 11 percent from a year ago to 4.17 billion dollars in the second quarter of its fiscal year.
It also announced a cut of up to 5,000 jobs over the next 18 months including 1,400 immediately owing to a slowing economy and weak spending on technology.
Copyright 2009  AFP Global Edition
