Stocks fall to 11-year low as firm registers largest-ever US quarterly loss.
Europe indexes hit
Britain’s FTSE 100 lost more than five per cent, closing at 3,626, Germany’s DAX fell 3.5 per cent to 3,710 and France’s CAC finished 4.5 per cent lower at 2,581.
In noon trading, the Dow Jones Industrial Average of leading US shares was down more than three per cent at 6842, the first time it had fallen below the 7,000 mark since October 1997.
Washington said it would lend $30bn to AIG after the insurer, which has already received $150bn in taxpayer aid, announced a $62bn fourth-quarter loss.
HSBC reported a 60 per cent drop in profits for 2008 and said it would cut more than 6,000 jobs in the US.
It also announced what would be Britain’s largest-ever rights issue, saying it planned to offer five billion shares for sale at $3.56 each.
Markets in the Asia-Pacific region closed down sharply earlier on Monday amid more gloomy news over the state of the US economy.
Japan’s benchmark Nikkei stock average slid 3.81 per cent following Friday’s news that the US economy shrank at its fastest quarterly rate in more than 25 years.
Shares in Mitsubishi UFJ Financial Group and other major financial institutions helped to drag the Nikkei down.
South Korea’s Kospi index closed down more than four per cent.
Investors there were reeling over more poor economic data, showing that exports in February were down 17 per cent from a year ago, the fourth straight month of declines.
In Hong Kong, share prices sank 3.86 per cent amid concerns over HSBC’s results.