World stocks hit 8-week low

Natsuko Waki
Reuters
Monday November 12, 2007

World stocks hit 8-week lows while the yen surged to 18-month peaks versus the dollar on Monday as fears about credit-related losses at financial firms prompted investors to reduce bets on risky trades.

Fresh concerns about further losses linked to the fallout in the U.S. subprime mortgage sector deepened over the weekend after Britain's Sunday Telegraph newspaper reported HSBC (HSBA.L: Quote, Profile, Research) would take a new $1 billion hit to results this week.

The report followed warnings on Friday by Bank of America Corp (BAC.N: Quote, Profile, Research) and JP Morgan Chase & Co (JPM.N: Quote, Profile, Research) on fourth-quarter results and the revelation by Wachovia Corp (WB.N: Quote, Profile, Research) of a potential $1.7 billion loss on mortgage-related debt.

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The credit crunch, which started in August, has worried consumers and threatened to weaken corporate profits and derail growth in the world's largest economy.

Fears of more misery in the financial sector also triggered broad unwinding of carry trades, where investors had sold the low-yielding yen to invest in higher-yielding assets.

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