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World Stocks Tumble

The drop comes despite a Bear Stearns-Citic tie-up.

World stocks swooned Monday on the heels of Wall Street's 2.7% drop Friday.

Shares in Asia slid overnight, led by a 2.2% decline in Japan's Nikkei and a 3.7% plunge in Hong Kong's Hang Seng. Other Asian markets were also in the red, with South Korea's Kospi slipping 3.3% and Taiwan down 2.6%. The lone market in the black was India, whose Sensex rose 0.3%.

Stocks followed suit in Europe, with France's Cac off 0.5% and Britain's FTSE and Germany's Dax each off just over 1%.

The selloff came even amid news reports of a big linkup between a Chinese bank and struggling U.S. investment house

Bear Stearns



The Wall Street Journal

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reported China's Citic Bank and Bear would invest $1 billion in each other. Rumors have swirled since this summer that Bear would be forced by problems tied to the subprime mortgage market to find a deep-pocketed global partner.

Elsewhere in the news Monday, Kohlberg Kravis Roberts and

Goldman Sachs

(GS) - Get Report

called off their acquisition of

Harman International


but agreed to invest $400 million in the company.