· Pedestrians are reflected on an electronic stock indicator of a securities firm in Tokyo Monday, Nov. 21, 2011. Japan's Nikkei 225 index fell 0.1 percent to 8,365.04 in the morning session as Asian stock markets headed lower Monday as a change of government in debt-laden Spain and Singapore's warning of a sharp growth slowdown underlined the challenges facing the world economy. (AP Photo/Shizuo Kambayashi)
By Pamela Sampson, The Associated Press
BANGKOK - World stock markets fell Monday as a change of government in debt-laden Spain and warnings from Asian officials of a sharp growth slowdown underlined the challenges facing the world economy.
Benchmark crude fell below $97 per barrel and the dollar strengthened against the euro but slipped against the yen.
European shares fell in early trading. Britain's FTSE 100 slipped 1.2 per cent to 5,300.67. Germany's DAX slumped 1.5 per cent to 5,715.68 and France's CAC-40 slid 1.3 per cent to 2,956.66. Wall Street also appeared headed lower, with Dow Jones industrial futures falling 0.9 per cent at 11,659 and S&P 500 futures down 1.2 per cent at 1,199.80.
The Nikkei 225 index in Tokyo fell 0.3 per cent to end at 8,348.27, its lowest closing since March 2009, after Japan announced an unexpected trade deficit for October.
Hong Kong's Hang Seng was 1.4 per cent lower at 18,225.85. South Korea's Kospi dropped 1 per cent to 1,820.03. Australia's S&P/ASX 200 fell 0.3 per cent to 4,163. Indexes in Singapore, Taiwan and Indonesia were also lower.
Mainland Chinese shares fell slightly, with the benchmark Shanghai Composite Index inching down less than 0.1 per cent to 2,415.13, its lowest close in almost one month. The Shenzhen Composite Index also was virtually unchanged at 1,031.50.
Market jitters were in evidence a day after Spain voted in a new government — the third time in as many weeks that Europe's debt crisis has toppled an administration. Governments in financially troubled Greece and Italy have also fallen.
Spain dumped its ruling Socialist government Sunday for the conservative leadership of Mariano Rajoy, who inherits an economy wracked by debt and an unemployment nightmare — which at more than 21 per cent is the highest among the 17 nations that use the euro.
Rajoy also must lower Spain's soaring borrowing costs with deficit-reducing measures while preventing an already moribund economy from heading into a double-dip recession.
Adding to pessimism, Chinese state media reported Vice Chairman Wang Qishan, who oversees trade and finance, predicting on the weekend that current global economic problems are likely to be long term.
Singapore on Monday warned that its economy will likely suffer a sharp slowdown next year as export demand from developed countries wanes. Because of its high reliance on trade, Singapore is often a bellwether for the rest of Asia.
Japan, meanwhile, said its exports fell for the first time in three months in October, eroded by a strong yen and a sputtering global economy.
"Japan has been in focus after swinging back to a trade deficit in October as its trade balance figures missed expectations this morning," Stan Shamu of IG Markets in Melbourne said in a report. "The news has seen Japan’s exporters come under pressure."
Mazda Motor Corp. lost 5.1 per cent, Honda Motor Corp. fell 2.2 per cent, and Panasonic Corp. lost 2 per cent. South Korea's LG Chem Ltd., which makes batteries for electronic cars, lost 4.3 per cent.
Stocks that are heavily dependent on exports to the West have come under pressure recently, said Linus Yip of Hong Kong-based First Shanghai Securities. Hong Kong clothing retailer Esprit Holdings slipped 4.8 per cent. China Merchant Holdings, a major port operator, fell 2.1 per cent.
"The market right now is still worried about future economic growth, the European debt problem," Yip said.
Energy and resource shares were hit hard by the uncertain outlook for the global economy. Hong Kong-listed China National Offshore Oil Corp., known as CNOOC, fell 3 per cent. China Coal Energy was down 4.9 per cent while Energy Resources of Australia lost 3 per cent. Japanese energy explorer Inpex Corp. fell 2.6 per cent.
Mainland Chinese shares in textiles and railway infrastructure companies led the gains while shares in coal miners and environmental protection companies weakened.
"Earlier forecasts on credit easing haven't actually come true and the situation in Europe is also affecting sentiment here," said Li Jianfeng, an analyst at Caida Securities, based in Shanghai.
Jinxi Axle Co. gained 5.7 per cent while China South Locomotive & Rolling Stock gained 2.1 per cent after reports citing an expert said a bullet train crash in July was largely due to management problems rather than technical issues.
Gains were muted on Wall Street on Friday. While the Conference Board's index of leading economic indicators rose more than Wall Street analysts were expecting — a sign that the economy may pick up in the coming months — many investors were cautious as a key Congressional committee remained deadlocked on ways to cut the U.S. budget deficit.
A bipartisan panel must agree on making at least $1.2 trillion in deficit cuts by Wednesday. If the committee fails and Congress takes no other action, automatic spending cuts will take effect beginning in 2013. Economists worry that a deadlocked Congress will erode business confidence and slow the already fragile U.S. economy.
The Dow Jones industrial average gained 0.2 per cent to close at 11,796.16. The Standard and Poor's 500 lost less than 0.1 per cent to 1,215.65. The Nasdaq composite slid 0.6 per cent to 2,572.50.
Benchmark crude for December delivery was down $1 at $96.65 a barrel in electronic trading on the New York Mercantile Exchange on Monday. The contract fell $1.41 to finish at $97.41 per barrel on the Nymex on Friday.
In currency trading, the euro fell to $1.3462 from $1.3518 late Friday in New York. The dollar weakened to 76.79 yen from 76.97 yen.