Investors scurried to safe-havens on Wednesday, with global stock prices falling sharply, as fear of a deepening worldwide slowdown wiped away optimism seen earlier this week over governments' bold steps to avert a financial meltdown. Leading European stock markets plunged 6.0-7.0 percent at the close of trade. The London FTSE 100 index of leading shares shed 7.16 percent to close at 4,079.59 points while in Paris the CAC 40 fell 6.82 percent to 3,381.07 points. The Frankfurt DAX gave up 6.49 percent at 4,861.63 points. The Milan stock market closed down 5.33 percent to 22,221 points. Russian stock markets shed around nine percent. The Dow Jones industrials dropped more than 7 percent, giving back a chunk of their huge 936-point advance from Monday. The government's report that retail sales plunged in September by 1.2 percent _ almost double the 0.7 percent drop analysts had expected _ made it clear that consumers are unlikely to reach for their wallets in the coming months as they worry about a shaky economy. US retailers posted their biggest monthly sales decline in more than three years in September, the Commerce Department said. Also, a gauge of manufacturing in New York state tumbled in October to the lowest since its inception in 2001, the New York Federal Reserve Bank reported. In the US Treasury bond market, longer maturity bond prices turned lower as investors worried anew about the huge slew of debt issuance that looms to pay for the US government's efforts to rescue the financial system. The benchmark 10-year US Treasury note was down 2/32 in price to yield 4.09 percent. The 2-year U.S. Treasury note rose 4/32 in price to yield 1.75 percent. Against the yen, the dollar fell 0.95 percent at 101.21.The dollar fell against major currencies, with the US Dollar Index off 0.01 percent at 81.571. The euro was down 0.19 percent at $1.3596. The gloomy economic news and rise in risk aversion came despite trillions of dollars pledged worldwide to recapitalize banks and stem the worst financial crisis since the 1930s. However, there were glimpses the concerted government efforts already were taking effect. The rate banks charge each other for dollar, euro and sterling loans fell for the second straight day as recent bold steps from authorities around the world continued to thaw out frozen money markets. India's central bank said it was injecting a further 400 billion rupees ($8.25 billion) into the financial system by cutting the cash reserve commercial banks must hold to 6.5 percent. The move is the third such cut in the past two weeks, bringing down the cash reserve ratio (CRR) from nine percent at the start of Oct.
