World stocks hammered as credit destruction continues

NEW YORK, Aug 28, 2007 (AFP) – Global stock markets saw dizzying declines Tuesday as a drop in US consumer confidence suggested slow growth ahead and Federal Reserve comments hinted at deeper-than-expected housing market woes. Shanghai managed to hit another record high however, on strong company earnings reports that pushed the overall market up by 0.87 percent to 5,194.69.

Wall Street losses accelerated late in the day, driving the main US share indexes down over two percent, while European shares suffered steep losses earlier.

Jitters resurfaced as the Conference Board, a business research group, said its consumer confidence index fell to 105.0 in August from 111.9 in July. The group attributed the decline to “softening” business and labor market conditions and financial market turmoil.

But the market action turned ugly after minutes released by the Federal Reserve from its August 7 meeting said the US housing meltdown “could well prove to be both deeper and more prolonged than had seemed likely earlier this year,” and that a “policy response” or rate move, might be needed.

Marc Pado, market strategist at Cantor Fitzgerald, said the market was worried that the Fed may have been less than fully candid in it