NEW YORK: World stock markets ended one of the most brutal quarters in years Friday, with bourses in New York and Europe seeing sell-offs to match the 2008 crisis and the dot.com bubble.
The New York Stock Exchange stumbled to the end of its worst three-months since the depths of the financial crisis exactly three years ago, while markets in Italy, Germany and France lost a quarter of their value.
The Dow Jones Industrial Average closed the quarter down 12 percent from the start of July as fears of another global slowdown dogged markets.
Compared with sister markets, traders in New York got off lightly.
In Europe where debt worries have plagued several countries and called the future of the eurozone into question, the sell-off was even more pronounced.
In the last three months Italy's main stock exchange has lost 27 percent of its value, while Frankfurt's DAX and Paris' CAC-40 have each lost 25 percent.
In Madrid losses were limited to 18 percent and on London's FTSE to just under 14 percent.
"We're closing the week, the month and the quarter on a very, very negative note and on heightened volatility," said Peter Cardillo of Rockwell Global Capital.
"It's been an ugly quarter. We had some good economic news but nevertheless it's still a continuing fear factor."
The final downward push on Friday came from news of rising inflation in Europe and declining purchasing power for Americans.
The US Commerce Department data that pointed to weakening consumer power as incomes fell by 0.1 percent in August, the first decline in nearly two years, even as prices for goods picked up.
"It seems very unlikely that consumers can lead the economy to a faster recovery pace," economists John Ryding and Conrad DeQuadros of RDQ Economics told clients in a briefing note.
Meanwhile there was unexpected news of sharply rising inflation across the eurozone, creating a dilemma for European Central Bank chief Jean-Claude Trichet who chairs his final policy meeting next week.
Trichet must now make a difficult call on whether to reduce interest rates to face a weak economy despite rising prices.
With firm hopes by investors that major central banks ease monetary policy in an effort to rekindle growth, inflation creeping up in the eurozone is sure to disappoint as it probably makes a rate cut from the ECB less likely.
In Asia, the Hong Sen Index plummeted 21.5 percent in the quarter, while key Shanghai, Bombay, Australia and Japanese indices all slid in the 11-14.5 percent range.
Throughout the last quarter Europe's sovereign debt crisis loomed over investors, and Friday was no different.
In Athens EU-IMF auditors played cat-and-mouse with protesters just as Greek Prime Minister George Papandreou in Paris gained assurances from President Nicolas Sarkozy of France's commitment to Greece, one day after German deputies agreed to boost the bloc's bailout fund.
France's own banks are critically exposed to sovereign debt from Greece and other weak links in the eurozone chain -- Italy, Spain and Portugal.
Fears on French and European banks have underscored major market falls.
"It's been one hell of a third quarter and the excitement of recent weeks is likely to continue over the next three months," said Kathleen Brooks, analyst at trading group Forex.com.
"We end the quarter no closer to a long-term solution to the European sovereign debt crisis ... and the global economic outlook is still a confusing picture.
"The euro is looking weak ... and stocks, which have had their worst quarter since 2008, look fragile. Will there be another leg lower for risk, or will Germany save the eurozone and cause a huge relief rally?" she said.
"These are the questions we grapple with as we enter the last three months of the year."
The New York Stock Exchange stumbled to the end of its worst three-months since the depths of the financial crisis exactly three years ago, while markets in Italy, Germany and France lost a quarter of their value.
The Dow Jones Industrial Average closed the quarter down 12 percent from the start of July as fears of another global slowdown dogged markets.
Compared with sister markets, traders in New York got off lightly.
In Europe where debt worries have plagued several countries and called the future of the eurozone into question, the sell-off was even more pronounced.
In the last three months Italy's main stock exchange has lost 27 percent of its value, while Frankfurt's DAX and Paris' CAC-40 have each lost 25 percent.
In Madrid losses were limited to 18 percent and on London's FTSE to just under 14 percent.
"We're closing the week, the month and the quarter on a very, very negative note and on heightened volatility," said Peter Cardillo of Rockwell Global Capital.
"It's been an ugly quarter. We had some good economic news but nevertheless it's still a continuing fear factor."
The final downward push on Friday came from news of rising inflation in Europe and declining purchasing power for Americans.
The US Commerce Department data that pointed to weakening consumer power as incomes fell by 0.1 percent in August, the first decline in nearly two years, even as prices for goods picked up.
"It seems very unlikely that consumers can lead the economy to a faster recovery pace," economists John Ryding and Conrad DeQuadros of RDQ Economics told clients in a briefing note.
Meanwhile there was unexpected news of sharply rising inflation across the eurozone, creating a dilemma for European Central Bank chief Jean-Claude Trichet who chairs his final policy meeting next week.
Trichet must now make a difficult call on whether to reduce interest rates to face a weak economy despite rising prices.
With firm hopes by investors that major central banks ease monetary policy in an effort to rekindle growth, inflation creeping up in the eurozone is sure to disappoint as it probably makes a rate cut from the ECB less likely.
In Asia, the Hong Sen Index plummeted 21.5 percent in the quarter, while key Shanghai, Bombay, Australia and Japanese indices all slid in the 11-14.5 percent range.
Throughout the last quarter Europe's sovereign debt crisis loomed over investors, and Friday was no different.
In Athens EU-IMF auditors played cat-and-mouse with protesters just as Greek Prime Minister George Papandreou in Paris gained assurances from President Nicolas Sarkozy of France's commitment to Greece, one day after German deputies agreed to boost the bloc's bailout fund.
France's own banks are critically exposed to sovereign debt from Greece and other weak links in the eurozone chain -- Italy, Spain and Portugal.
Fears on French and European banks have underscored major market falls.
"It's been one hell of a third quarter and the excitement of recent weeks is likely to continue over the next three months," said Kathleen Brooks, analyst at trading group Forex.com.
"We end the quarter no closer to a long-term solution to the European sovereign debt crisis ... and the global economic outlook is still a confusing picture.
"The euro is looking weak ... and stocks, which have had their worst quarter since 2008, look fragile. Will there be another leg lower for risk, or will Germany save the eurozone and cause a huge relief rally?" she said.
"These are the questions we grapple with as we enter the last three months of the year."
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