LONDON &

Turbulence roiled world stock markets again today, with Asian stocks falling on fears of recession in the United States while European stocks were down even after the U.S. Federal Reserve cut interest rates.




The surprise Fed move cutting its key lending rate a steep three-quarters of a percentage point was aimed at fears that trouble on financial markets from the U.S. subprime crisis was spreading to the broader economy. Interest rate cuts tend to boost stocks.




European stocks fell sharply at the opening, then rose in volatile trading, adding more after the rate decision.




early afternoon the U.K.'s FTSE 100 was down 0.5 percent at 5,550.80, Germany's DAX fell 1.6 percent at 6,681.53, while France's CAC 40 was down 1,1 percent at 4,692.21.




European officials said their economies were positioned to weather the turbulence from the United States.




British Prime Minister Gordon Brown's spokesman Michael Ellam said that "the fundamentals of the British economy have remained sound &

inflation is low, we have had 61 consecutive quarters of economic growth, employment is at record highs."




He said the government would do everything in its power "to maintain economic stability."




But the spokesman would not comment on speculation about whether British interest rates should be cut in response. The Bank of England is independent of the British government; many think it will cut rates at its next meeting.




Stocks were off sharply in Asia, where Japan's Nikkei 225 index nose-dived 5.7 percent &

its biggest percentage drop in nearly 10 years &

to 12,573.05, a day after falling 3.9 percent. Australia's benchmark index sank 7.1 percent, its steepest one-day slide in nearly 20 years.




Hong Kong's Hang Seng index, which slumped 5.5 percent Monday, finished down 8.7 percent. In China, the Shanghai Composite index lost 7.2 percent to 4,559.75, its lowest close since August.




Indian Finance Minister P. Chidambaram urged investors to remain calm after trading in Mumbai was halted for an hour when the stock market there fell 10 percent within minutes of opening. The Sensex rebounded some to close down 5 percent after plunging 7.4 percent Monday.




"There is no reason at all to allow the worries of the Western world to overwhelm us," Chidambaram said.




Investors have dumped shares in frenetic trading the last two days on worries that the U.S. economy, battered by a credit crisis and housing slump, will shrink in coming months, weakening demand for exports.




There is also skepticism that American authorities will be able to prevent a recession. The Federal Reserve has indicated it will lower interest rates further, and U.S. President Bush has proposed an economic stimulus package that includes $145 billion in tax cuts, but investors around the world are doubtful that the measures will lift the economy quickly.




"Unless we get some positive 'shock effects,' such as drastic measures from the U.S. government, there is almost no hope for a recovery in stocks," said Koji Takeuchi, senior economist at Mizuho Research Institute in Tokyo.




U.S. markets were closed Monday for a holiday commemorating civil rights leader Martin Luther King Jr.




Wall Street plunged at the opening of trading Tuesday, propelling the Dow Jones industrials down more than 400 points after the Fed's interest rate cut failed to calm fears of recession.




In the opening minutes of trading, the Dow was down 446 at the 11,652 level. It last was below 12,000 in March 2007.




Noritsugu Hirakawa, who monitors stock trading at Okasan Securities Co. in Tokyo, said investors were spooked by the drastic falls on Chinese and Indian markets &

the two emerging economies that are viewed as sustaining global growth even as the U.S. economy sputters.




"The end to the slides in Asian stocks is nowhere in sight," he said. "There is even speculation that China may be exposed to the U.S. subprime mortgage crisis."




Indonesia's benchmark index closed the day down 7.7 percent, Singapore's Straits Times index sank 6 percent and Taiwan's market fell 6.5 percent.




Asian markets have been in a downward spiral for most of January. Since the start of the year, Japan's Nikkei index has tumbled nearly 18 percent, while the Hang Seng is down a stunning 22 percent.