LONDON — Europe and Asia’s markets both experienced sharp falls during trading this morning following more downbeat economic news.
The FTSE was down 1.9 percent, that DAX dipped 3.3 percent and the CAC 40 was down 2.7 percent. Tokyo’s Nikkei 225 closed down 1.3 percent.
Among the factors pushing down share prices was a report from Morgan Stanley released this morning. It warned that the world economy is “dangerously close to a recession.”
The bank cut its global GDP growth forecasts to 3.9 percent in 2011, from an original 4.2 percent, and to 3.8 percent in 2012, from an original 4.5 percent. Alongside “disappointing incoming data,” the bank blamed its downgraded forecasts on, “recent policy errors in the U.S. and Europe, plus the prospect of further fiscal tightening there in 2012. This is eroding business and consumer confidence and has weighed down on financial markets.”
Britain’s Office of National Statistics said this morning that retail sales volumes in the U.K. were flat in July, compared to the same month last year, and up 0.2 percent compared to the previous month, a worse than expected performance. Volume sales of textiles, clothing and footwear fell 1 percent in July, compared to the previous year.
Almost all luxury and retail stocks were down following the morning’s news. Marks & Spencer fell 1.8 percent, French Connection was down 2.8 percent and Burberry Group was down 4.6 percent.