Stocks sink worldwide on inflation, Ireland debt

08:31, November 17, 2010      

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Spooked by fears that inflation is rising in Asia's major economies and a possible financial meltdown of Ireland, investors worldwide sold off stocks on Tuesday.

Stocks fell for a fourth day on Wall Street Tuesday as concerns over a slowdown in China and talks about a bailout for Irish banks combined to push the Dow Jones industrial average to its largest one-day loss since August.

Asian markets started a global sell-off after South Korea's central bank raised interest rates to curb inflation. Shares fell sharply in Shanghai and Hong Kong as speculation spread that China will take more steps to control rising inflation, which would dampen global demand for industrial goods.

In Brussels, European finance ministers ended a meeting without an agreement to bail out Ireland. However officials said they're moving ahead with preparations to support the country's troubled banks.

The Dow Jones industrial average fell 178.47, or 1.6 percent, to 11,023.50. It dipped below 11,000 during the day for the first time since October 20. The Standard & Poor's 500 index fell 19.41, or 1.6 percent, to 1,178.34.

Commodities prices also fell sharply as investors shed riskier assets and anticipated weaker demand for basic materials from China. The dollar jumped 0.9 percent against an index of six other currencies as investors sought safety.

As Asian countries dealt with inflation, European finance ministers discussed a bailout for Ireland's banks in hopes of preventing another crisis of confidence in Europe's financial system. The country has so far refused any outside financial assistance.

A fiscal crisis in Greece resulted in a global swoon in stock prices in Ma. Greece had to be bailed out by fellow European nations and the International Monetary Fund.

Ireland's situation is different from Greece's, but their respective debt crises are having similar effects on markets. As new doubts emerge about Europe's ability to keep its financial system sound, investors are abandoning the euro, flocking to the dollar, dumping risky assets like stocks and commodities and sending borrowing rates for countries they see as credit risks soaring.

There are also fears that if Ireland needs a bailout, it will spook investors who hold debt from other European countries.

People's Daily Online / Agencies


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