London - World stock markets slumped for a second day running on Tuesday amid the prospect of a year-long recession in Japan.
About an hour after the start of trading across Europe, London was down 1.56%, Frankfurt shed 1.52% and Paris lost 1.65% in value.
Earlier, Tokyo had closed down 2.28%, Hong Kong tumbled 5.94% and Sydney shed 3.6%.
US stock markets had fallen by about 2.50% on Monday as global recession worries intensified, dealers said.
Japan's economics minister said on Tuesday that he had "no confidence at all" that the world's second largest economy will grow next year.
"In reality we see few factors that would contribute to positive growth" in the fiscal year starting next April, Economic and Fiscal Policy Minister Kaoru Yosano told reporters.
"If I judge what is happening honestly, I have no confidence at all now that there will be positive growth," he said, a day after official figures showed Asia's biggest economy is in recession.
The government has never before predicted a contraction for the upcoming year in its annual economic outlook report, which is published each December. The worst-ever forecast was for zero growth in fiscal 2002.
Extent of recession underestimated?
Meanwhile in Asian stock market trading on Tuesday, Shanghai dived 6.31%, Seoul slid 3.9% and Manila lost 3.42%.
The losses are "primarily still due to concerns over the United States," said George Ching, an analyst at Philippines online broker Citiseconline.
"If you look at it fundamentally, nothing has changed. The US is still expected to go through a recession and the concern now is how deep the recession will be," he said.
"They are concerned that the recession would be deeper than what everyone expected," considering that the economic data coming out of the United States is worse than what many economists had projected.
In Britain meanwhile, investors awaited official data expected to show the first drop in British inflation for more than a year.
British 12-month inflation stands at a 16-year high of 5.2% but is set to tumble in the coming months owing to sliding energy and food prices, according to analysts.
Inflation figures for October are due to be published at 09:30 GMT.
British inflation data "will certainly have the potential to provide further direction for equities in the near term," said CMC Markets dealer Matt Buckland.
On Monday in New York, the Dow Jones Industrial Average dropped 2.63%, the tech-heavy Nasdaq fell 2.29% and the broad Standard & Poor's 500 index declined 2.58%.
Trading remained nervous as markets reacted to news that Japan had joined the eurozone in recession and more forecasts said the US economy was likely headed for the same fate.
A series of rally attempts failed to hold and selling accelerated late in the day.
- AFP