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Subprime Mess Slams World Stocks

Indexes drop sharply in Asia and Europe.
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Stocks across the globe were deep in the red Wednesday after U.S. markets took another hit.

In Asia, Japan's Nikkei dropped 2.2%, Hong Kong's Hang Seng slid 3.2% and China's Shanghai Composite tumbled 3.8%, while markets in India, Korea and Taiwan fell 4%.

In Europe, every market was off between 1.5% and 2.5%, with the exception of modest gains in Switzerland and Spain.

The news comes a day after U.S. stocks staged a deep selloff into the close on news of the latest casualties in the subprime lending business.

American Home Mortgage

(AHM)

saw its shares plunge 89% after the company's lenders cut it off, forcing it to consider options including liquidation.

Earlier, mortgage insurers

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and

MGIC

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suffered double-digit declines after they said they might have to write off their $500 million-plus investments in subprime mortgage investor C-Bass.

After the market closed, investors were further vexed by news that another

Bear Stearns

(BSC)

hedge fund has stopped allowing investor redemptions, and by reports that an Australian hedge fund has been hit by sharp declines tied to the swoon in U.S. credit markets.

A day after the Dow Jones Industrial Average dropped 146 points, stock futures were pointing lower stateside.