Global Markets Hit by Frenzied Selling

(Updated from 7:12 a.m.)

European markets are getting hammered today as major bourses feed on weakness in U.S. equity futures, which in turn had weakened this morning after the rout in European stocks. According to traders, what's happening today isn't motivated by any one company, but by continued worries about a global economic slowing. The selling in Europe is accelerating and U.S. futures are deep in the red.

Most major European indices are down sharply, including London's FTSE 100, which hit a 27-month low today. Lately the FTSE was down 231 points to 5489, which is a 2.5% loss. Germany's Xetra Dax was hit hard, down 277 to 5685, a 4.7% decline. And Paris' CAC-40 lost 197 to 4989, a 3.8% loss. Finland's Helsinki General Index was dropping 369 to 7722, a 4.6% drop.

Apparently there's a lot of fear around the world about a prolonged global economic slowing and concern that technology will continue to get hit since spending and demand has declined sharply. That's been reflected in the multitude of earnings warnings from major technology companies in the last several months and calls for the various central banks to adopt an easier monetary policy.

There is also ongoing concern about Japan's staggering economy after international rating agency Fitch put 19 Japanese banks on a negative credit watch, including Mizuho, the largest banking company. However, Tokyo's Nikkei 225 finished the day higher, gaining 23.89 to 11843.59, missing all this selling. The Hang Seng was off 162.19, or 1.20%, to 13330.84. Sources said Nikkei stock futures were sinking after that index's close.

"We're seeing a classic global stock market rout, and a flight to quality," said Mike McGlone, options trader at Aubrey G. Lanston. "We had Fitch with the Japanese banks and a rumor of more potential problems."

Also driving European markets were rumors that Nokia (NOK Quote - Cramer on NOK - Stock Picks) would announce an earnings shortfall, but the selling is bigger than just rumors of a warning. Technology stocks and big-cap stocks are getting smashed in Europe.

In the United States, the Nasdaq 100 tracking stock, the QQQ, was down 5% with about a million shares traded on electronic trading network Instinet, accounting for about 25% of preopen trading volume so far.