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Asian markets drop as investors fearful of recession unload stocks
BANGKOK (AP) ' The sell-off in Asian markets continued Monday, as Europe's prolonged debt crisis and the possibility of a global recession caused investors to flee riskier assets like stocks.
Japan's Nikkei 225 index fell 1.6 percent to 8,421.53. South Korea's Kospi index was 1.4 percent lower at 1,673.47. Hong Kong's Hang Seng index fell 0.2 percent to 17,633.21. Bucking the trend was Australia's S&P ASX index, up 0.5 percent to 3,921.60.
On Wall Street on Friday, the Dow Jones industrial average rose slightly ' but closed the week down 6.4 percent, its worst showing since the depths of the financial crisis three years ago.
Fears about Europe's debt increased early Friday on news that Moody's Investors Service had downgraded its ratings of eight Greek banks by two notches. Investors have been waiting in vain for news that Greece will receive the next installment of a bailout package in time to avoid defaulting on its debt next month.
If it defaults, banks throughout Europe are likely to lose the money they invested in Greek bonds ' and investors fear that could ultimately lead to a recession in Europe and the U.S.
Finance ministers from 20 large countries pledged Friday to take "all necessary actions to preserve the stability of the banking systems and financial markets." But they offered nothing specific.
Europe's problems helped feed the heavy selling in stocks this week. But the chief worry was that the U.S. is headed for another recession and that the Federal Reserve is running out of ways to fight it.