London - Global stock markets stumbled on Wednesday on mounting fears of a collapse of the huge US automobile industry, a key pillar of the United States economy, the world's largest.
"Lingering concerns over US auto makers pose further risks to equities," Barclays Capital analyst David Woo said in London.
By late morning, the London stock market had lost 1.65% in value compared to Tuesday's close. Frankfurt slid 0.99% and Paris shed 1.36% nearing the half-way stage.
European Central Bank chief Jean-Claude Trichet on Wednesday called upon the private sector to play an "essential role" in helping to end the world economy's most turbulent period since World War II.
In a short television interview with Britain's Sky News, Trichet also said that joint efforts were needed to reduce the abundance of financial booms and busts.
"It is the first time that the heart of the finance of the industrialised countries are at stake, are in very very turbulent and difficult episodes. In that sense it is new and it is the first time since World War II," Trichet said.
No immediate relief for US
He added that the fallout was "solvable by joint efforts of authorities and certainly central banks, governments and also the private sector has an essential role to play of course to get out of that situation."
Trichet said it would "take a certain deal of time" to come out of the "difficult episode."
Meanwhile in Asian stock market trading on Wednesday, Tokyo closed down 0.66%, Hong Kong fell 0.77% and Sydney dropped 0.7%.
US Treasury Secretary Henry Paulson had on Tuesday warned there was no immediate relief in sight for the American economy, but he ruled out dipping into a giant Wall Street bailout package to help his country's struggling "Big Three" automakers.
"The crisis in our financial system had already spilled over into our economy and hurt it," Paulson told a hearing of the House of Representatives Financial Services Committee.
"It will take a while to get lending going and repair our financial system, which is essential to an economic recovery."
US automakers return to Capitol Hill on Wednesday, hat in hand, a day after warning lawmakers that the economy faced a "catastrophic collapse" if the government does not come through with $25bn in loans needed to keep their businesses afloat.
'Unfathomable'
But quick passage of the bailout seemed unlikely amid opposition from the Bush administration and skeptical lawmakers who on Tuesday questioned whether General Motors, Ford and Chrysler would be able to pay back the loans or if the money would simply be used to perpetuate failure.
After a heated four-hour debate with members of the Senate banking committee, executives from Detroit's Big Three were set to have another chance to press their case before a House of Representatives panel on Wednesday.
"The auto industry is related to many other industries and the negative impact (of its possible collapse) on employment is unfathomable," said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.
US stocks made modest gains on Tuesday as investors swung between Hewlett-Packard's upbeat outlook and the depressing economic climate.
The Dow Jones Industrial Average rose 1.83% and the tech-heavy Nasdaq closed up 0.08%.
The broad Standard & Poor's 500 index advanced 0.98%. Wall Street reopens at 14:30 GMT.
Elsewhere on Wednesday, the Indian stock market closed down 1.83%, Seoul slid 1.9% and Singapore dropped 1.59%.
Shanghai, however, surged 6.05% as bargain-hunters bought up energy stocks, spurring an across-the-board rally after steep losses the previous day, dealers said.
- Sapa