Stocks Drop From Tokyo to New York

Stocks tumbled around the world, sending the MSCI World Index to its biggest weekly drop since November, Europe’s Dow Jones Stoxx 600 Index to a five-year low, and Japan’s Topix Index to the worst level since 1984., Bloomberg 2/20/2009 10:36:07 AM

U.S. stocks fell, extending the market’s worst weekly drop in three months, as concern deepened that the government will need to take over struggling banks. Treasuries rallied and gold climbed above $1,000 an ounce.

Citigroup Inc. and Bank of America Corp., which combined have received more than $90 billion in federal aid, slid more than 17 percent on concern nationalization will wipe out shareholders. Europe’s benchmark index sank to a five-year low, and Japan’s Topix plunged to the lowest since 1984. U.S. stocks briefly pared losses as telephone companies rallied after Goldman Sachs Group Inc. advised buying shares of AT&T Inc. and Verizon Communications Inc.

The Standard & Poor’s 500 Index decreased 2.5 percent to 759.81 at 12:57 p.m. in New York and is down more than 8 percent on the week. The Dow Jones Industrial Average fell 170.29 points, or 2.3 percent, to 7,295.6 after sliding below its lowest close since 2002 yesterday.

European stocks retreated, sending the Dow Jones Stoxx 600 Index to the lowest in almost six years, as companies from Anglo American Plc to Cie. de Saint-Gobain SA indicated the recession is deepening.

Anglo American Plc decreased 17 percent as the mining company suspended its dividend and share buybacks. Saint-Gobain, Europe’s biggest supplier of building materials, lost 15 percent after reporting a drop in profit and saying it plans on selling new shares. UBS AG tumbled 14 percent after Switzerland’s largest bank was sued by the U.S. government.

The Stoxx 600 fell 3.5 percent to 176.93, a level not seen since March 31, 2003. The gauge retreated 7.5 percent this week, the biggest slump since December.

Stocks tumbled around the world, with the MSCI World Index of 23 developed countries sinking for a ninth straight day. Japan’s Topix Index slid to the lowest since 1984.

The Stoxx 600 has retreated 51 percent since the start of last year as credit-related losses at financial firms worldwide climbed to $1.1 trillion and Europe, the U.S. and Japan fell into the first simultaneous recessions since World War II.

National benchmark indexes decreased in all 18 western European markets. The U.K.’s FTSE 100 slid 3.2 percent, while Germany’s DAX slid 4.8 percent. France’s CAC 40 retreated 4.3 percent.

Asian stocks fell, dragging the regional benchmark index to a three-month low, as the deepening global recession raises bad-loan costs and hurts profits. Japan’s Topix index closed at its lowest in 25 years.

National Australia Bank Ltd., the nation’s biggest by assets, declined 2.1 percent after Goldman Sachs Group Inc. cut its recommendation and Australia & New Zealand Banking Group Ltd.’s chief executive officer said bad debts are spreading. Qantas Airways Ltd. lost 4.3 percent in Sydney as Moody’s Investors Service cut its debt rating and oil prices climbed. Bridgestone Corp., the world’s No. 1 tiremaker, fell 7.4 percent in Tokyo after saying profit will drop 71 percent this year.

The MSCI Asia Pacific Index dropped 2.1 percent to 76.07 as of 7:12 p.m. in Tokyo, the lowest since Nov. 20. The gauge lost 7 percent this week, taking its slump this year to 15 percent. The measure tumbled by a record 43 percent in 2008, as the worsening credit crisis sent the world’s biggest economies into recession.

Japan’s Topix fell 1.6 percent to 739.53, the lowest close since January 1984. Hong Kong’s Hang Seng Index dropped 2.5 percent. All benchmark indexes in the region declined except in China, Pakistan and Sri Lanka. China’s Shanghai Composite Index rose 1.5 percent as the government widened stimulus measures.