World stocks fall as Spain woes intensify

Associated Press Modified: May 30, 2012 at 4:45 am •  Published: May 29, 2012
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BANGKOK (AP) — Investors unnerved by Spain's worsening financial condition and a report that China has no plans for a major economic stimulus dragged world stock markets lower Wednesday.

Worries about Europe's financial stability worsened after a ratings agency slapped Spain with a downgrade Tuesday because it may have trouble repaying its debt amid slowing growth and rising unemployment. Spain has a 24.4 percent jobless rate and is battling its second recession in three years.

Traders are also concerned that Europe's fifth-largest economy may struggle to save its banking sector, worsening the region's chronic debt crisis. Jitters have worsened since Friday, when Bankia, Spain's fourth-largest lender, said it needed €19 billion ($23.8 billion) in state aid.

Markets also reacted to a microblog posting by China's official Xinhua News Agency that said Tuesday the government had denied reports of plans for a massive new stimulus, said Dickie Wong, executive director of Kingston Securities Ltd. in Hong Kong.

The report adds "pressure to the local stocks markets" on top of fears of sputtering Chinese growth, he said.

However, that report was later deleted and no other Chinese media outlets carried it. Meanwhile, Chinese leaders have recently indicated their intention to implement limited measures to help rev up the economy.

European stocks opened lower. Britain's FTSE 100 fell 1.4 percent to 5,317.22. Germany's DAX lost 1 percent to 6,336.06 and France's CAC-40 shed 1.3 percent at 3,044.22. Wall Street headed to a lower opening, with Dow Jones industrial futures down 0.6 percent to 12,503 and S&P 500 futures losing 0.7 percent to 1,323.60.

Stocks stumbled earlier in Asia. Japan's Nikkei 225 index fell 0.3 percent to close at 8,63319 as Europe's troubles sent the yen higher against the euro. That hurts Japanese exporters by making their goods more expensive.



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