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2218World markets plunge for second day

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  • Greg Cannon
    Feb 27, 2007
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      World markets plunge for second day

      By HANS GREIMEL, Associated Press Writer 1 hour, 7
      minutes ago

      TOKYO - Stock markets plunged across much of Asia for
      a second day Wednesday amid jitters about a sell-off
      in China's stock market and a worries about a possible
      slowdown in the Chinese and U.S. economies.

      Shares in Tokyo, Hong Kong, Singapore, Malaysia,
      Australia, New Zealand, the Philippines and Indonesia
      all tumbled more than 3 percent in morning trading,
      following dismal overnight losses on Wall Street, the
      worst since the Sept. 11, 2001, terrorist attacks.

      In China, stock modestly recovered from their 9
      percent plunge Tuesday — their biggest drop in a
      decade. The Shanghai Composite Index was up 1.2
      percent to 2,804.28.

      But investors in other Asian markets dumped shares
      Wednesday, with Japan's Nikkei 225 stock index down
      644.85 points, or 3.56 percent, to 17,475.07 points at
      the close of the morning session.

      Hong Kong's Hang Seng Index was down 3.8 percent,
      while Australia's benchmark S&P/ASX200 index shed 3.5
      percent. Indonesian shares lost 5.2 percent, while
      Philippine stocks plunged 9.4 percent.

      The trouble began Tuesday — just one day after Chinese
      stocks hit a record — as investors unloaded shares to
      lock in profits amid speculation about a fresh round
      of austerity measures from Beijing to slow the
      nation's sizzling economy.

      The Shanghai Composite Index tumbled 8.8 percent, its
      largest decline since Feb. 18, 1997. In New York, the
      Dow Jones Industrial Average slid 416 points, or 3.3
      percent, to 12,216.24. Main European indexes fell
      about 3 percent.

      Investors were also spooked by comments Monday from
      former U.S. Federal Reserve Chairman Alan Greenspan,
      who said a recession in the U.S. was "possible" later
      this year.

      On Wednesday, Australian Treasurer Peter Costello
      predicted the plunge in China's share market would
      trigger "volatility on equity markets for some time."

      But his overall assessment of China's economy was
      positive, telling reporters the Asian giant would
      continue to grow, albeit "in fits and starts."

      Japan's Chief Cabinet Secretary Yasuhisa Shiozaki
      tried to quell concerns about the Tokyo market saying
      the overall fundamentals in Japan were still strong.

      "On a broad perspective the corporate sector continues
      to perform well," Shiozaki said. "A long-term economic
      recovery is continuing."

      Some regional brokers said they saw an element of
      panic selling among retail investors but that more
      experienced investors were sitting it out. Other
      market players were on the look out for bargain
      hunters to emerge later in the session.

      Australian brokers said they were confident the fall
      was a correction, not the start of a bear market.

      "I'd put a number of say 3-5 percent on it today,"
      said AMP chief economist Shane Oliver, adding that the
      drops could extend to 10 percent in the next few
      weeks. "I don't see it having major economic
      implications and therefore I'm pretty confident it's
      just a correction."