Share prices in the United States and Britain went into a tailspin yesterday, posting their biggest drops in four months on fears that the US housing slump is spreading.
The Dow Jones index slipped by about 220 points, or 1.6 per cent, while the tech-heavy Nasdaq shed 1.9per cent - the biggest point losses since March 13. The broad-market Standard & Poor's 500 index retreated 29.77 points (1.93 per cent) to 1511.80.
The fall came after Countrywide Financial, the largest US mortgage lender, posted a 33 per cent decline in quarterly profit and slashed its 2007 forecast as more homeowners fell behind on payments.
Countrywide's data suggest that credit deterioration is extending beyond "sub-prime" borrowers, who have weaker credit histories, and afflicting "prime" or "near-prime" borrowers thought to be better credit risks.
Other disappointing US results came from high-profile names including American Express, DuPont and Texas Instruments.
Earlier, European markets took a tumble. The FTSE suffered its biggest drop since March, falling 1.9 per cent. Traders said the dip was caused by more widespread concerns related to UK interest rate rises, the weaker US dollar, fears about the impact of the US sub-prime mortgage lending and the ailing US housing market.
The main markets in Paris and Frankfurt lost more than 1.5 per cent.
Asian stocks also slid in early trading last night, led by Toyota and Samsung.
The Morgan Stanley Capital International Asia Pacific Index lost 0.7 per cent, having hit a record on Tuesday. All 10 industry groups included in the benchmark fell.
The Nikkei 225 Stock Average slid 1.1 per cent and the Kospi, which yesterday touched 2000 for a first time, fell 0.4 per cent in South Korea.
