Global Stocks Slump; Nikkei Slides 2.4%

BANGKOK -- World markets fell sharply Wednesday as traders dumped shares following steep drops on Wall Street amid concerns that political unrest in Iran and Libya could send oil prices soaring and paralyze the global economic recovery.

Oil prices hovered near $100 a barrel, and the dollar strengthened against the yen and the euro.

European bourses were lower following a downdraft from markets in Asia.

Britain's FTSE 100 was 0.8% lower to 5,886.60. Germany's DAX dropped 0.6% to 7,175.53 and France's CAC-40 in Paris dropped 0.6% to 4,041.73. U.S. futures augured a sluggish day on Wall Street, with Dow Jones industrial futures down 0.1% to 12,007 and S&P 500 futures flat off 0.1% at 1,299.30.

In Japan, the benchmark Nikkei 225 stock average slid 2.4% to 10,492.38 while South Korea's Kospi slipped 0.6% to 1,928.24. Hong Kong's Hang Seng index was down 1.5% to 23,048.66.

Investor sentiment wilted over higher fuel prices and their effect on the global economy, as unrest in oil-producing countries continued. Iran clamped down on anti-government protesters and forces loyal to Libya's leader Moammar Gadhafi launched counterattacks against rebels expanding control over the country.

Fears that the unrest might spread to Saudi Arabia, the world's largest oil exporter, is keeping many investors on the sidelines, said Matthew Lewis, head of sales trading in Sydney at CMC markets.

"The trigger, I think, is that the Libyan crisis looks like it is not going to go away as easily as it did in Egypt. Iran is showing a little bit of unrest," he said. "There is growing concern that Saudi Arabia is in the middle of that. What would happen to oil prices if there were civil unrest in Saudi Arabia?"

Australia's S&P/ASX 200 shed 0.5% to 4,803.20. The Australian economy grew 0.7% in the final quarter of 2010, according to official figures released Tuesday. That met expectations and didn't have much impact on the market, said Lewis.

Chinese shares edged lower as investors cashed in on recent gains before the opening later this week of the annual session of the national legislature.