World shares sharply lower after wobbly day on Wall Street

World shares tumbled on Wednesday after a wobbly day on Wall Street as markets churned over the prospect of a possible recession.US futures and oil prices declined and Chinas yuan weakened sharply.Trading has been volatile since the Dow Jones Industrial Average followed other major US indexes into a bear market earlier this week.In early trading, Germanys DAX lost 1.3 per cent to 11,983.29 and the FTSE 100 in London was also down 1.3 per cent, at 6,895.21.

World shares tumbled on Wednesday after a wobbly day on Wall Street as markets churned over the prospect of a possible recession.

US futures and oil prices declined and China's yuan weakened sharply.

Trading has been volatile since the Dow Jones Industrial Average followed other major US indexes into a bear market earlier this week.

In early trading, Germany's DAX lost 1.3 per cent to 11,983.29 and the FTSE 100 in London was also down 1.3 per cent, at 6,895.21. In Paris, the CAC40 gave up 0.9 per cent to 5,702.50.

The future for the S and P 500 was 0.8 per cent lower and the contract for the Dow industrials lost 0.6 per cent.

China's yuan fell to a 14-year low against the dollar Wednesday despite central bank efforts to stem the slide after US interest rate hikes prompted traders to convert money into dollars in search of higher returns.

The yuan fell to 7.2301 to the dollar, its lowest level since January 2008. One yuan was worth about 13.8 cents, down 15per cent from its March high.

A weaker yuan helps Chinese exporters by making their goods cheaper abroad, but it encourages capital to flow out of the economy.

That raises costs for Chinese borrowers and sets back the ruling Communist Party's efforts to boost weak economic growth.

Chinese shares weakened, with the Shanghai Composite index losing 1.6 per cent to 3,045.07. The Hang Seng in Hong Kong plunged 3.4 per cent to 17,250.88.

Elsewhere in Asia, Tokyo's Nikkei 225 index sank 1.5 per cent to 26,173.98 while the Kospi in Seoul lost 1.5per cent to 2,169.29. In Sydney, the S and P/ASX 200 gave up 0.5 per cent to 6,462.00.

The week started off with a broad sell-off that sent the Dow Jones Industrial Average into a bear market, joining other major US. indexes.

On Tuesday, the S and P 500 slipped 0.2 per cent, its sixth consecutive loss.

The Dow fell 0.4per cent and the Nasdaq composite wound up with a 0.2 per cent gain.

Small company stocks held up better than the broader market. The Russell 2000 added 0.4 per cent.

Major indexes remain in an extended slump on fears that the higher interest rates being used to fight inflation could knock economies into recession.

The Sand P 500 is down roughly 8 per cent in September and has been in a bear market since June, when it had fallen more than 20 per cent below its all-time high set on January 4.

The Dow's drop on Monday put it in the same company as the benchmark index and the tech-heavy Nasdaq.

Central banks around the world have been raising interest rates to make borrowing more expensive and cool the hottest inflation in decades.

The Federal Reserve has been particularly aggressive. It raised its benchmark rate, which affects many consumer and business loans, again last week. It now sits at a range of 3 per cent to 3.25 per cent, but was near zero at the start of the year.

The Fed also has released a forecast suggesting its benchmark rate could be 4.4 per cent by the year's end, a full percentage point higher than it envisioned in June.

Wall Street is worried that the Fed will hit the brakes too hard on an already slowing economy and veer it into a recession.

The higher interest rates have been weighing on stocks, especially pricier technology companies, which tend to look less attractive to investors as rates rise.

Investors will be watching the next round of corporate earnings very closely to get a better sense of how companies are dealing with inflation.

Companies will begin reporting their latest quarterly results in early October.

The government will release its weekly report on unemployment benefits on Thursday, along with an updated report on second-quarter gross domestic product.

On Friday, the government will release another report on personal income and spending that will help provide more details on where and how inflation is hurting consumer spending.

In other trading Wednesday, US benchmark crude lost 26 cents to USD 78.24 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, used to price international oils, shed 23 cents to USD 84.64 per barrel in London.

The dollar fell to 144.71 Japanese yen from 144.81 yen. The euro was at 95.55 cents, down from 95.92 cents.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)