Markets in Europe, Asia tumble amid Wall Street turbulence

LONDON -- European stock markets opened with a feeble rally Tuesday, then plunged as skittish investors fled in the wake of U.S. financial scandals and wild fluctuations on Wall Street. Asia's major markets also fell Tuesday.

London's Financial Times-Stock Exchange 100-share index was down 104.5 points, or 2.63 percent, at 3,890.00 Tuesday morning, reversing an early rally that may have been caused by news that Britain's inflation rate had fallen to its lowest level in over 25 years.

On Monday, the FTSE fell 229.6 points, or 5.4 percent, to 3,994.5, its lowest close since Dec. 17, 1996, and the biggest single-day fall since the Sept. 11 terrorist attacks in the United States.

Tuesday's fall came after the FTSE gained 85 points in early trading. Analysts said the turbulence was a sign of things to come. Investor confidence has been shaken by accounting scandals at major American companies, and fears of more to come.

The Dow Jones industrial average momentarily plunged more than 400 points Monday in New York, although it recovered to close 45 points lower at 8,639.19.

European investors were wary Tuesday amid fears of further falls to come.

Hank Potts, an equities strategist at Barclays Private Clients in London, said markets were expecting the Dow Jones to drop more than 100 points when it opened on Tuesday. "On Wall Street, there was a kind of rally (Monday), but there was no strength or commitment in it in reality," he said.

Investors also were waiting to see what Federal Reserve Chairman Alan Greenspan would say when he made his twice-yearly address to the U.S. Senate's Banking Committee later Tuesday.

Tuesday was a difficult day for major Asian stock markets, too.

Tokyo's benchmark 225-issue Nikkei Stock Average shed 124.73 points, or 1.20 percent, to close at 10,250.42. The Nikkei regained some ground by midday, but worries crept back toward the end of the day.

"The mood turned cautious over what's ahead tonight," said Hiroichi Nishi, general manager at Nikko Cordial Securities in Tokyo. "People want to see what's going to happen on Wall Street."

In Hong Kong, the benchmark Hang Seng Index dipped 160.17 points, or 1.51 percent, to 10,421.49.

"One must wait to see if the declines in the U.S. dollar and U.S. stocks are an omen of more volatility to come," the Chinese-language Hong Kong Economic Journal said in a front-page commentary.

Singapore's Straits Times Index fell 23.91 points, or 1.5 percent, to 1,585.85.

Main benchmarks also fell more than 1 percent in Taiwan and South Korea.