World stock markets slump...and it's only Monday

LONDON (AP) -- World stock markets slumped again Monday with the Nikkei index in Japan closing at its lowest in 26 years as the financial crisis drove up the yen, piling the pressure on the country's exporters.

Tokyo's Nikkei 225 index closed down 6.4 percent to 7,162.90 - the lowest since October 1982. Hong Kong's Hang Seng Index tumbled 12.7 percent to 11,015.84, its lowest close in more than four years and biggest daily decline since 1991.

European markets followed Asia lower, with benchmarks in Britain, Germany and France trading down more than 4 percent in early trading. The FTSE 100 index was 190.31 points, or 4.9 percent, lower at 3,693.05, while Germany's DAX was down 182.81 points, or 4.3 percent, at 4,112.86. France's CAC-40 was the worst performing European index, down 184.65 points, or 5.8 percent, at 3,009.14.

"Worries about the impact of the surging yen on Japanese export earnings have hit the Nikkei hard," said Julian Jessop, chief international economist at Capital Economics.

"This in turn has led to sharp falls in European markets even when, as on Friday, the U.S. had closed higher the day before," he added.

Dow futures were down 268 points, or 3.2 percent, at 7,994. Standard & Poor's 500 futures were down about 4 percent.

Mounting concerns about the yen and the effect of the financial crisis on currency markets prompted the world's seven leading industrial nations to issue a statement Sunday warning about the "recent excessive volatility" in the value of the Japanese currency, which is rising against the U.S. dollar towards the 90 yen level and near 13-year highs.

"We continue to monitor markets closely, and cooperate as appropriate," the G7 said.

The statement has raised the prospect of coordinated intervention to stem the yen's appreciation.

"Although action could emerge at any time, it seems to us that it would achieve its maximum impact were it seen to be led by the U.S. Treasury," said Simon Derrick, currency strategist at Bank of New York Mellon.

"The New York morning today may therefore provide an ideal opportunity for them to make a clear statement of intent," he added.

Monday's sharp stock market declines came amid another round of government measures to boost markets. In South Korea, the central bank slashed its key interest rate Monday by three-quarters of a percentage point - its biggest cut ever - to prevent Asia's fourth-largest economy from lurching into recession.

In oil, crude prices weakened after OPEC's move to cut production in an attempt to halt the declines. Light, sweet crude for December delivery was down $2.24 to $61.91 a barrel. Oil prices have plunged more than 57 percent from a record $147.27 in mid-July.