World markets fall sharply after Fed action on bonds

By Michael Birnbaum,
WashPost
Thursday, September 22, 5:43 AM

BERLIN –World markets plunged Thursday after the Federal Reserve took a dramatic step to help revive the U.S. economy — and in the process sent a message that America’s financial malaise seems unlikely to dissipate any time soon.

Key European and Asian indexes were down more than 4 percent.

Investors took the Fed’s surprise action to purchase longer-term bonds--an effort to push down long-term interest rates even further--as a sign that it felt the U.S. downturn could last for a long time. That pessimism added to a growing sense that the international economy is approaching a precipice.

Germany’s DAX tumbled 4.31 percent in morning trading, to 5199.12. France’s CAC 40 dropped 4.81 percent, to 2794.50. Britain’s FTSE 100 was down 4.74 percent, and Hong Kong’s Hang Seng closed down 4.85 percent.

(More here.)