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World financial crisis

World Markets tumble, Asians set up joint fund

Article published on the 2008-10-24 Latest update 2008-10-24 16:08 TU

Nicolas Sarkozy (4th L) and Hu Jintao (3rd L) lead other representatives of Asem countries into the Great Hall of the People(Photo: Reuters)

Nicolas Sarkozy (4th L) and Hu Jintao (3rd L) lead other representatives of Asem countries into the Great Hall of the People
(Photo: Reuters)

Asian stockmarkets took a nosedive on Friday and were followed by Europe's bourses, which opened substantially down in a further deepening of the global financial crisis. East Asian countries agreed to set up a common fund to fend off future economic crises. They were meeting in Beijing ahead of the Asem summit with French President Nicolas Sarkozy and other European leaders.

European equities spiralled downward on Friday, following a fierce sell-off in Asia, both sparked by fears of a global recession.

London stocks were down five per cent after recovering from a fall of more than nine per cent, Frankfurt crashed by 10.13 per cent early but closed just under 5 per cent while Paris tumbled by more than seven percent before recovering slightly to a 3.5 per cent loss.

Russia suspended trading on its stock market until at least Tuesday after losing more than 10 per cent and hitting its lowest level since 2004.

On Wall Street, future trading was suspended as investors scrambled to sell. The Dow Jones Industrial Average plunged 4.69 per cent to 8,287.36 in the first 10 minutes of trade. The Nasdaq saw a dive of 5.41 percent to 1,517.16.

Earlier Japan's Nikkei index fell 9.6 per cent, South Korea's Kospi 10.6 per cent, Sydney 2.6 per cent, Singapore 8.67 per cent and Hong Kong nearly seven per cent. Brazil's stocks fell 3.57 per cent, after more than ten per cent on Wednesday.

Japan's yen reached a 13-year high against the dollar and to six-year high against the euro, meaning bad news for the country's exporters.

East Asian nations grouped in the Association of South-East Asian Nations (Asean) plus South Korea, Japan and China agreed to set up a 64-billion-euro joint fund by next June to guard against regional financial crises. Discussions on setting up the fund began in 2006.

The leaders, who were meeting before the Asia-Europe (Asem) meeting in Beijing, also agreed to take an active part in fighting the current financial crisis.

French President Nicolas Sarkozy, also in Beijing for the Asem summit, called on the 43 participating countries to form a united front ahead of the G20 meeting on the financial crisis on 15 November.

Sarkozy called for a "common front of initiatives so that the same causes do not lead the same effects".

In Paris, Finance Minister Christine Lagarde denied reports that the sovereign wealth fund announced by Sarkozy on Thursday would be worth 100 billion euros. She said that no exact amount had yet been agreed to.