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World stocks lower as Obama takes oath

NEW YORK, Jan 20 – Global stock markets extended losses on Tuesday as growing concerns about the health of the banks and financial system undercut the feel-good factor inspired by the inauguration of Barack Obama.

The Dow Jones Industrial Average dropped 1.48 percent to 8,158.57 at 1522 GMT as trading resumed after the Martin Luther King Day holiday.

The Nasdaq shed 2.42 percent to 1,492.34 and the Standard & Poor\’s 500 broad-market index lost 2.19 percent to 831.50.

In Europe, London\’s FTSE 100 index closed down 0.42 percent at 4,091.40 points. In Paris the CAC 40 fell 2.15 percent to finish at 2,925.28 points while in Frankfurt the Dax lost 1.77 percent to 4,239.85.

Banking shares worldwide dragged down markets due to concern that further losses will lead to more nationalizations. Concern was focused in Britain where Royal Bank of Scotland and Lloyds are in trouble again.

"US equities sold off sharply at the open, partly as a function of the British banking crisis and partly due to renewed concerns over this week’s round of earnings reports," said David Evans, market analyst at

In London, RBS lost 11.21 percent to 10.30 pence, Lloyds fell 31.08 percent to 44.80 pence and Barclays dropped 17.16 percent to 72.90 pence.

RBS, majority-owned by the British government, had Monday forecast an annual loss for the group of up to 28 billion pounds — a record in British corporate history — owing to the credit crisis and its part in the costly and mis-timed takeover of Dutch lender ABN Amro.

Also Monday, Britain unveiled a second multi-billion pound bank rescue package aimed at kick-starting its stalled economy.

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In France, BNP Paribas dropped 13.33 percent to 23.85 euros while Societe Generale dropped 13.67 percent to 24.64 euros. Germany\’s Deutsche Bank fell 5.14 percent to 16.98 euros.

In Belgium, KBC shed 23.71 percent to 9.75 euros as the government there said it was preparing a second bailout package for the banking sector.

Among US banks, Citigroup slid 11 percent to 3.11 dollars and Bank of America — which got a bailout last week of 20 billion dollars in US capital — tumbled 17 percent to 5.96 dollars.

JPMorgan Chase slid 12.8 percent to 19.89 dollars and Wells Fargo dropped 14.35 percent to 16.00 dollars.

"The current leaning indicates that Mr. Obama\’s honeymoon period will be a short one — it may already be over," said Patrick O\’Hare at

"It also indicates the concern that exists about a nationalization of the banking system."

Asian stock markets reflected the concern as Tokyo shed 2.31 percent and Hong Kong lost 2.90 percent on Tuesday.

"Heightening concerns over the health of banks globally triggered a worsening in investor risk-appetite," said NAB Capital strategist John Kyriakopoulos in Sydney, where the stock market closed down 3.1 percent.

Also Tuesday, Japanese car giant Toyota released figures showing a four percent fall in global sales in 2008 due to slumping demand — its first decline since 1998.

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It later announced it had appointed Akio Toyoda — grandson of the company\’s founder — to be the new president as part of a reshuffle of top management aimed at turning around the world\’s second biggest auto maker.

Last month the firm forecast its first-ever annual operating loss for 2008.

Reports also suggested it was considering shedding a further 3,000 temporary workers to weather the industry slump.

"When Obama\’s inauguration ceremony ends, market participants will wake up" to reality, said Sumitomo Mitsui Banking Corp. strategist Daisuke Uno.

The new president is expected to push through a massive new stimulus package of up to 825 billion dollars to kick start the US economy.

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