Milan

Milan bourse drops as Tokyo shares tumble

Fears of a slowdown in Asia drive a sell-off in Europe

Milan bourse drops as Tokyo shares tumble

Milan, May 23 - Milan's leading financial market plunged by almost 3% in early trading Thursday as European markets weakened over fears triggered by manufacturing data from Asia. The FTSE-Mib lost 2.8% in morning activity while in Paris, markets shed 2.5%, Frankfurt fell by 2.6% and London's FTSE 100 dropped 1.8%. All were reacting to reports that Asia's two largest economies - China and Japan - are showing significant signs of stress. A dramatic 7.3% plunge in the Japan's Nikkei 225-share index was blamed, at least in part, on a weak purchasing managers' index that suggests the massive Chinese economy has lost steam. That, in turn, triggered fears that the new Japanese government's efforts to stimulate economic growth may not succeed in the longer term. Stock markets fell across the region in response, triggering a sell-off in Europe. Meanwhile, the spread between Italy's 10-year bond and its German counterpart widened to 262 basis points in early trading, up from Wednesday's close of 248 points. The yield on Italian 10-year paper nudged up slightly to 4%. The spread is a good indication of investor faith in the Italian economy and its ability to ride out the current recession.

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