LONDON (AP) – World stock markets fell Thursday as broader concerns about a global slowdown dampened relief over the U.S. Senate’s passage of the $700 billion bank rescue package.

The Dow Jones industrial average fell, pushing Europe’s stock markets into the red. The Dow ended 3.2 percent lower, shedding 348.22 points to 10,482.85. Britain’s FTSE 100 closed down 1.80 percent at 4,870.34, while Germany’s DAX was 2.51 percent lower at 5,660.63 and France’s CAC 40 was 2.25 percent softer at 3,963.28.

All three of Europe’s main stock markets were higher before Wall Street opened.

Latin America’s stock markets were also in retreat on fears that the global economic slowdown will further rein in demand for the region’s commodities. Sao Paulo’s Ibovespa index led losses, slumping 7.3 percent to 46,145. Chile’s IPSA lost 3.9 percent to 2,669 and Mexico’s IPC index slipped 4.3 percent to 24,027.

Those fears about the outlook for the global economy became more acute with the release of further grim U.S. economic news. The government reported that the number of people seeking unemployment benefits rose last week to a seven-year high and that demand at the nation’s factories has fallen by the largest amount in nearly two years.

Earlier, in Asia, Japan’s Nikkei 225 average fell 1.9 percent to 11,154.76 and benchmarks in Australia, South Korea and Taiwan also dropped.

However, Hong Kong’s market, down for much of the day, managed a late rally, lifted by gains in insurer Ping An and expectations that China will introduce supportive market measures. The Hang Seng index rose 1.1 percent to 18,211.11.

“The markets are reluctant to take as a completely done deal that (the bailout plan) will go through, but there is a growing feeling that it will because it was decisively approved by the U.S. Senate,” said Andrew Bell, head of research at Rensburg Sheppards, an investment management company in Britain.

“Global banks are injecting lots of liquidity, which is oiling the creaking engine, and there is an optimistic view that central banks are willing to cut rates in the coming weeks,” he said. But there has been a “big loss of economic momentum in the last few months,” he added.

Swiss bank UBS cheered investors by announcing it expects “a small profit” in the third quarter, raising hopes that a dismal year of U.S. sub-prime related losses – to the tune of some 45 billion Swiss francs ($40 billion) – may soon be over.

Switzerland’s largest bank also said it has further reduced its exposure to the subprime-related investments that caused it to make massive writedowns, beginning a year ago.

Shares in UBS, which has been one of the European banks hardest hit by the U.S. property market meltdown, rose 5.7 percent in Zurich trading.

The European Central Bank left its refinancing rate unchanged at 4.25 percent for the 15-nation euro zone, as inflation fears outweighed worries about the meltdown. However, ECB President Jean-Claude Trichet said a rate cut was discussed at the meeting of the governing council, raising expectations that the central bank may be moving toward a cut.

“The ECB has signaled today that it is prepared to cut rates any time, alone or on a coordinated fashion,” said Jacques Cailloux, a European economist at Royal Bank of Scotland.

“This volte-face from the ECB shows that the bank has lost complete confidence about the economic outlook and recognizes that an interest-rate cut might now finally be needed,” he said.

Also Thursday, France announced it will host a European financial summit Saturday in Paris with Germany, Britain and Italy, and European central banks made yet more dollars available to money markets, offering up another $60 billion in overnight funds to keep the financial system flush with cash.

Asian investors gave a tepid reaction to the Senate’s approval Wednesday to a revised bailout plan aimed at stabilizing the U.S. financial system. The House of Representatives, which rejected an earlier version of the bill, will likely vote on the bill Friday.

Even if the package is approved, traders are skeptical about its ultimate impact on a faltering global economy. Cleaning up the pile of bad debts on banks’ balance sheets will be a long, arduous process, and the crisis is spreading in Europe, where governments have bailed out two troubled banks, Fortis NV and Dexia.

If the plan is rejected again by the House, “it will be a big problem,” said Tsuyoshi Nomaguchi, a strategist at Daiwa Securities in Tokyo. “But even if it passes, the focus will be on the economy.”

U.S. auto sales dropped below 1 million last month for the first time in more than 15 years as some consumers struggled to get financing and others were frightened away from showrooms by bank failures and turmoil on Wall Street.

Shares of Toyota Motor Corp. tumbled 3.4 percent after sales in the U.S. last month dropped 32 percent. Honda Motor Co. shed 4.5 percent after saying its U.S. sales fell 24 percent in September. Nissan Motor Co., whose U.S. sales plummeted 37 percent, declined 4.0 percent.

In Seoul, shares of top Korean automaker Hyundai Motor Co. slipped almost 1 percent. The company said Wednesday that it sold 25 percent fewer cars in the U.S. in September than a year earlier.

Insurer Ping An’s stock soared on news announced late Tuesday that it would not complete its proposed purchase of half of Belgian-Dutch bank Fortis’s asset management arm for 2.15 billion euros ($2.99 billion). Because of Wednesday’s market holiday in Hong Kong, it was the first chance for investors to react to the news.

Markets in China, India, Malaysia and Indonesia were closed due to national holidays.


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