Asian shares have fallen, after declines in the US and Europe, amid fears that the financial crisis is spreading to bigger economies.
Japan’s Nikkei 225 index, South Korea’s Kospi and Australia’s ASX all fell more than 1%.
The latest sell-off was triggered by rumours that France may become the next country to lose its triple A credit rating.
There was also speculation that one of its biggest banks was in trouble.
Analysts have warned that markets are likely to remain choppy in coming sessions.
« We have had volatile markets in the past that have headed in one direction, but this time around no one seems to know what is going to happen, » Andrew Robinson of Saxo Capital Markets told the BBC.
« On Tuesday, you had the Dow Jones up by 4%, if had you asked me then, I would have said it looks like we have bottomed out.
« But you wake up this morning to find that it is down by the same magnitude again. »
Compounding issues
Concerns about European debt issues have rocked the markets for some time now, though the fears have mainly been limited to smaller, so-called periphery economies such as Greece and Portugal.
However, analysts said the emergence of new worries that the region’s biggest economies may also be vulnerable has fanned fears further.
« As the economies get larger, the chances to bail them out are going to get slimmer, » said Saxo Capital Markets’ Mr Robinson.
On Wednesday, France’s Cac share index ended down 5.5% despite the French government’s assurance that its credit rating was not under threat.
While ratings agencies Moody’s, Standard & Poor’s and Fitch reaffirmed France’s AAA credit rating, analysts said investors remained skepitcal about the country’s financial health and the stability of its banking sector.
Shares of French lender Societe Generale fell as much as 20% after it was forced to deny it was under financial pressure. The shares ended 15% lower.
« I think there’s concern about just how much Greek debt French banks really do hold and how much the European Central Bank is willing to backstop all this, » said Bret Barker of TCW.
Other markets
Also on Wednesday, London’s FTSE fell by 158 points to 5,007, taking £41bn off the value of the index. It has now lost almost 15% in the last nine trading sessions.
Italy’s FTSE MIB ended down 6.7%.
UK banking shares were also hit, with Barclays down 8.7%, Royal Bank of Scotland 7.3%, and HSBC 5.3%.
On Wall Street, the Dow Jones Industrial Average lost 4.6%, or 520.29 points to close at 10,719.48 in its fifth straight day with a rise or fall of more than 400 points.
New York’s broader S&P 500 index fell 51.81 points, or 4.42%, to 1,120.72.
bbcnews
