World stock markets tumble on news of Lehman bankruptcy

PARIS -- World stock markets turned sharply lower Monday after being hit by a pair of blows from Wall Street -- news that Lehman Brothers had filed for bankruptcy and Merrill Lynch would be sold to Bank of America.

In Europe, the FTSE-100 share index closed down 3.9 percent in London, the Paris CAC-40 was off 3.8 percent and Germany's DAX 30 index of blue chips sagged 2.7 percent.

Japan's stock market, which was closed Monday for a holiday, opened with steep losses early today. The benchmark Nikkei stock index dropped more than 4 percent in early trading. South Korea's leading stock index also shed 5.4 percent in the first 20 minutes of trading today after reopening following Monday's holiday.

In Russia, where stocks were already suffering from falling oil prices and worries about political interference in business, the MICEX index was down 6.2 percent and RTS index was 4.8 percent lower.

The falls were led by insurance and financial stocks, with shares in French insurer AXA SA down 8.5 percent, Germany's Commerzbank AG falling 9 percent, and Britain's HBOS 17.55 percent lower.

"In the short term, we are looking at a fresh wave of weakness hitting financial markets," said Chloe Magnier, chief economist at Saxo Bank in Paris. "I'm not optimistic about the coming months."

Europe's major central banks moved quickly to calm markets Monday, pumping billions of euros and pounds into the financial system.

Similarly, the Bank of England offered up 5 billion pounds (nearly $9 billion) in a three-day auction.

Among Asian markets that were open for business, India's Sensex tumbled 3.4 percent, Taiwan's benchmark plummeted 4.1 percent and Singapore dropped 3.2 percent.

In Latin American markets also tumbled, with Brazil and Argentina falling the hardest, with 7.6 percent and 5.2 percent drops. In Mexico, the market slipped 3.8 percent, while in Chile stocks were down 0.7 percent.