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Global stocks at 5-1/2 year lows

(Agencies)
Updated: 2008-11-20 19:15

LONDON -- World stocks dropped to 5-1/2 year lows and oil hit 22-month troughs as investors reacted to dire Federal Reserve warnings on the economy and fears about the viability of major US auto makers and bank giant Citigroup.

A pedestrian walks along a side street in Seoul November 20, 2008. [Agencies]

Federal Reserve officials slashed economic growth forecasts through 2009, with the lower range of the Fed's central tendencies forecasting the US economy could shrink by 0.2 percent.

Related readings:  Tokyo stocks close sharply lower in morning trading  Mainland stocks join worldwide declines  Asia stocks sink as layoffs add to global gloom  Stocks decline further on economic woes

At least one among household names General Motors Corp, Ford Motor Co and Chrysler LLC is at risk of bankruptcy if a last-minute bail-out plan fails.

The plight of US automakers highlighted the increasing damage which the world's financial crisis is inflicting on the real economy.

"We have contracting economic growth, falling corporate profits, and increasing unemployment which is filtering through to every part of the economy," said Henk Potts, investment manager at Barclays Stockbrokers.

The MSCI world equity index fell 2.3 percent to 197.90, its lowest since May 2003, driven lower in Asia after data showing Japan's exports to Asia fell for the first time in six years.

European shares also approached their lowest since June 2003, with the FTSEurofirst 300 index of leading European shares dropping 3 percent, following losses of 5 percent or more on Wall Street.

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