World leaders urge calm amid fresh market turmoil

PARIS, Aug 16, 2007 (AFP) – World leaders on Thursday insisted that the US credit crunch would not cause an economic crisis but stock markets across the world plummeted yet again as investors remained unconvinced. Prime Minister Howard said Australia had a much smaller percentage of the sort of risky subprime mortgage loans that caused the financial meltdown in the United States and urged people not to overreact. US Treasury Secretary Henry Paulson admitted that American growth will be hit but said the economy would weather the storm because it came “against a backdrop of a very healthy global economy with strong fundamentals.”

French President Nicolas Sarkozy said he was confident the fallout from US credit markets would have no long-term effect on growth, while Australia’s Prime Minister John Howard said the economy could withstand the shock.

But their words failed to convince stock markets.

They tumbled yet again, wiping tens of billions of dollars off share values in Asia and Europe. From London to Hong Kong, Tokyo and Sydney weary traders’ screens were awash with red again.

All eyes were on Wall Street, where markets were to reopen at 1330 GMT, and where on Wednesday anxiety again gripped i