World stocks tumbled Monday as signs of weak U.S. consumer confidence aggravated doubts in the recovery’s strength, overshadowing news that Japan’s economy climbed out of its recession last quarter.

Shanghai’s market led sharp declines across Asia, plummeting nearly 6 per cent, as investors rushed to cash out following a recent run-up. European benchmarks were about 1 per cent lower, while prices for crude and other commodities fell.

Worries about the pace of economy recovery in the U.S. were partly to blame after a key report on Friday showed U.S. consumer confidence was weaker than expected in early August. Coupled with disappointing retail sales data, the report gave investors more reason to fear growth in the world’s largest economy will remain tepid for some time even once the recession technically ends.

Investors seemed little comforted by news that Japan joined Germany and France as developed economies broken free from recession. Japan, the world’s second-largest economy, grew 0.9 per cent in the second quarter compared with the prior quarter as export sales picked up after the country’s deepest slump since World War II.

“People have been getting nervous about the markets. We’re so overbought, many people are moving to take profit,” said Winson Fong, managing director, SG Asset Management in Hong Kong, who helps oversee about $2 billion in Asian equities. “We don’t need to worry too much about the fundamentals for now, but in the next couple weeks we may see some more selling.”

In Europe, Britain’s FTSE-100 lost 0.9 per cent, Germany’s DAX was off 1.2 per cent and France’s CAC-40 fell 1.3 per cent. U.S. futures pointed to losses on Wall Street Monday.

Earlier in Asia, Japan’s Nikkei 225 stock average dropped 328.72 points, or 3.1 per cent, to 10,268.61 0.


Japan’s Nikkei rises to eight-week highMarch 17, 2010

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