Stocks drop amid U.S. slowdown fears

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

Shares in exporters and financials dropped, derailing a rally in Asian markets the previous day that saw Japanese stocks post their biggest daily gain in six years on optimism about the global economy.

The dollar stayed weak on the growing concerns about the outlook for the world's largest economy, a worry for exporters as stronger Asian currencies hit returns earned overseas.

Safe-haven assets such as bonds and gold edged higher, while platinum retreated from an historic high hit on Thursday. Oil prices fell after gaining more than 2 percent on Thursday.

"Although both the U.S. and Japan had surprisingly good indicators this week, if you look at the actual contents they weren't really that good," said Yutaka Miura, a senior technical analyst at Shinko Securities.

"Add in Bernanke, the ratings cut and UBS, and it's clear that the subprime worries are still there."

Fed Chairman Ben Bernanke acknowledged the outlook for the U.S. economy had worsened in recent months and said risks to growth had increased.

The financial sector was among the decliners after Moody's Investors Service on Thursday cut its top "AAA" rating on a unit of FGIC Corp by six notches, raising fears about sell-offs in the debt guaranteed by the U.S. bond insurer.

Bond insurers face billions of dollars in payouts after they guaranteed repackaged subprime mortgages and other risky debt.

Swiss bank UBS shocked markets on Thursday with tens of billions of dollars of new exposure to risky U.S. mortgages, leveraged finance and complex securities.

• 1
• 2