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Wall Street heads for another precipitous drop as fears of a punishing global recession stirred panic among
investors and sent world financial markets into a tailspin. The Dow
Jones industrial average futures fell as much as 550 points,
triggering a freeze in selling.
      

The massive decline was caused by increasingly grim news from
overseas. In Japan, shares of Sony sank more than 14 percent after
it slashed its earnings forecast for the fiscal year. In Germany,
Daimler's stock dropped 11.4 percent in morning trading after it
reported lower third-quarter earnings and abandoned its 2008 profit
and revenue guidance.
      

Japan's Nikkei stock average fell a staggering 9.60 percent. In
Europe, Germany's benchmark DAX index was down 10.76 percent,
France's CAC40 dropped 10 percent while Britain's FTSE 100 sank
8.67 percent after the governmnet said its gross domestic product
fell 0.5 percent in the third quarter, putting the country on the
brink of recession.
      

The dour outlook convinced investors that the world economy is
headed for a long and severe downturn despite a raft of government
rescue efforts aimed at pulling the financial system from the
brink. It also indicated that the tremors caused by the global
credit crisis may have only begun to be felt in their true scope
and magnitude.
      

Fearing more carnage in world equity markets, big hedge funds
and other institutional investors have been pulling out their money
en masse in a bid to reduce risk and raise cash - a process known
as deleveraging that only intensifies the selling.
      

Ahead of the market's open, Dow Jones industrial average futures
fell the maximum allowed limit of 550, or 6.27 percent, to 8,224.
That triggered "circuit breakers" that automatically freeze
selling until the market's 9:30 a.m. EDT open. However, traders can
still buy stocks and send the market higher.
      

The Standard & Poor's 500 index futures index was also down the
maxium allowed 60 points, or 6.56, to 855.20, and the Nasdaq 100
index futures was down the maximum allowed 85.00, or 6.20 percent,
to 1,175.75.
      

The big drop in futures trading raised the possibility that
circuit breakers intended to prevent panic selling could be
triggered during regular trading - something that hasn't happened
since 1997.
      

If the Dow Jones industrial average falls 10 percent before 2
p.m., the market will shut down for an hour. If the threshold is
breached between 2 p.m. and 2:30 p.m., the halt will last 30
minutes. Trading would stop again if the Dow falls by 20 percent.
If trading falls by 30 percent at any time, trading would be halted
for the day.
      

Elsewhere in Asia on Friday, Hong Kong's Hang Seng index fell
8.3 percent to 12,618. Markets in India, Thailand, Indonesia and
the Philippines were also down sharply as investors bailed from
emerging markets to cut their exposure to risky assets and meet
redemption needs at home.
      

The sudden gloom over growth expectations is having the added
impact of putting small economies and currencies under extreme
pressure. Investors are pulling money out of countries in Eastern
Europe, Latin America and Asia on fears vulnerable countries will
not only be hit hard by the financial crisis but may also default
on debt.
      

In Europe, for example, Hungary, Ukraine and Belarus are all,
like Iceland, in talks with the IMF to discuss possible loans.
      

Meanwhile, demand for U.S. Treasurys jumped as investors sought
safe places to put their money. The three-month bill, regarded as
the safest assets around, yielded 0.85 percent, down from 0.94
percent late Thursday.
      

The U.S. dollar, meanwhile, plunged below 93 yen, a 13-year low,
as traders reacted to dismal U.S. jobs data that spurred
speculation the Federal Reserve might cut interest rates.
Meanwhile, gold prices plunged.
      

Light, sweet crude was down $4.64 to $63.20 premarket electronic
trading on the New York Mercantile Exchange. The sell-off, another
sign that investors fear a severe recession, came despite OPEC's
announcement that it will cut production by 1.5 million barrels a
day in a bid to shore up sagging prices.
     

 Associated Press writers Carlos Piovano in London, Alex Kennedy
in Singapore, Shino Yuasa in Tokyo and Kelly Olsen in Seoul
contributed to this report.
      
      

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Wall Street heads for another precipitous drop as fears of a punishing global recession stirred panic among
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