LONDON — World stock markets swooned once more Wednesday as concerns about the state of the global economy outweighed a coordinated rate cut by top central banks aimed restoring confidence in the world's crisis-stricken financial system.
Stock markets initially took heart in the news that the U.S. Federal Reserve, the Bank of England, the European Central Bank and others had cut their key interest rates by a half-percentage point. But the rally soon dissipated amid severe stresses in lending markets.
"The coordinated interest rate cuts got the 'thumbs down' from equity markets, suggesting we have not yet turned the corner in this financial crisis," said John Higgins, senior markets economist at Capital Economics.
Central banks in Brazil and Mexico intervened to prop up their local currencies, which are under severe pressure as investors flee for safer havens.
The coordinated rate cuts were intended to send a strong message, as well as keep the credit crisis from further damaging the wider economy as companies struggle to borrow for everyday and long-term needs. Fearful banks are refusing to lend to one another, and markets in commercial paper, or short-term unsecured company debt, have been frozen.
Iceland: The country plunged further into financial crisis as it scrapped plans to nationalize a major bank, Glitnir — instead placing it into receivership — and abandoned attempts to put a floor under its falling currency by fixing the exchange rate. Adding to Iceland's woes, the British government said that it plans to sue over lost deposits held by tens of thousands of Britons with Icelandic bank accounts.
russia: At what point is a stock market no longer a functioning stock market? Every day this week, regulators have had to halt trading on Russia's main bourses, the world's hardest-hit stock markets during the current crisis. They closed the RTS and Micex exchanges three times on Monday — and the RTS still managed to lose 19.1 percent, its worst day. Trading reopened at 1 p.m. Tuesday, and on Wednesday, it was suspended after shares collapsed 14 percent in the first hour. Regulators said the Micex will reopen on Friday; the RTS was suspended indefinitely.
JAPAN: The stock market plummeted 9.4 percent — its biggest one-day drop in 21 years — as investors rushed for the exits on deepening fears over the global financial crisis. The benchmark Nikkei 225 index nose-dived 952.58 points to 9,203.32, a five-year low. That was its third-biggest drop in percentage terms and the largest plunge since October 1987. Toyota's shares fell nearly 12 percent on concerns about its earnings amid a slump in the vital U.S. car market.
LATIN AMERICA: Investors panicked again Wednesday, prompting central banks to sell billions of dollars in reserves to prop up local currencies while stocks dived in a third straight day of extremely volatile trading. Chile's IPSA was leading losses in late afternoon trading, down 4.8 percent, and Brazil's Ibovespa closed down 3.9 percent.