September 16th, 2008 10:23 EST
World Stocks Still Shocked by US Financial Meltdown
Stock prices around the world continued falling for a second day following the bankruptcy of a major U.S. investment bank and other problems in the U.S. financial sector shook markets.
At the close of Asian trading, Tokyo`s Nikkei index was down nearly five percent, while Hong Kong markets fell a bit more.
Major European stock indexes were sharply lower at midday Tuesday, with London`s key index (FTSE 100) dropping about three percent (156 points to 5,049) to hit a new three-year low.
Russia`s Interfax news agency headlined market "panic" after Russian stocks plunged more than 10 percent.
Meanwhile, central banks in Europe and Asia are pumping billions of dollars into the financial markets to reassure bankers so they keep lending.
Monday, U.S. President George Bush said officials are working to "reduce disruptions." He called U.S. financial markets strong and flexible enough to weather the problems in the long run.
Mr. Bush spoke after the Lehman Brothers investment bank filed the largest bankruptcy in U.S. history. The move followed crisis talks that failed to produce government backing for the company, which prompted potential buyers to walk away from the firm.
Meanwhile, the Bank of America agreed to acquire troubled U.S. investment bank and brokerage firm Merrill Lynch for $50 billion.
Investment banks arrange the sale of stocks and bonds for companies and often make major investments of their own.
In the case of Lehman, Merrill and insurance giant AIG, investments in risky mortgage-backed securities lost billions of dollars.
Some information for this report was provided by AFP, AP and Reuters.