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World markets down as Germany hits recession

  • Story Highlights
  • London, Paris and Frankfurt are trading just below break-even point
  • German economic output contracted by 0.5 percent in July-September period
  • Markets in Japan and Australia tumble about 5 percent
  • Hong Kong's Hang Seng index slips 6 percent
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(CNN) -- European markets opened lower Thursday following earlier sell-offs across Asia, while new figures showed that the German economy -- Europe's biggest -- has slipped into recession in the third quarter.

Traders at Frankfurt stock exchange

Traders at the Frankfurt stock exchange face up to the prospect of a German recession.

Shares in London, Paris and Frankfurt were all slightly down between 0.5 and 1.5 percent in early morning trading.

Earlier Thursday, Germany's Federal Statistical Office said that economic output contracted by 0.5 percent in the July-September period compared with the previous quarter.

That followed a 0.4 percent decline in gross domestic product in the second quarter -- the first decline since late 2004.

The picture was equally gloomy in the UK as telecoms giant BT announced it was cutting around 10,000 jobs, mainly among agency workers and sub-contractors, The British Press Association said.

The news came as the unemployment rate in the UK reached an 11-year high of 1.82 million, according to official figures released Wednesday.

Meanwhile, stocks in Asia slipped deeper into negative territory as investors came to terms with the likelihood that a long and deep recession is on the horizon.

"The concern is that the economy will turn out worse than the current forecast (and) the recession will be longer and more severe," said Hugh Johnson, chief strategist at ThomasLloyd Global Asset Management in New York.

Japan's Nikkei average finished the day down 5.3 percent, while the KOSPI index in Seoul lost 3.2 percent.

In Australia, the All Ordinaries finished the day down 5.4 percent, while Hong Kong's Hang Seng index slipped 6 percent in afternoon trading.

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In further sign that a global recession is starting to take hold, China announced that its powerhouse manufacturing sector slowed in October.

China's industrial output grew 8.2 percent in October compared to year-ago levels -- a decline in growth of 3.2 percent from September, the National Bureau of Statistics reported.

Elsewhere, a Kuwaiti court has ordered the temporary closure of the country's plummeting stock exchange, The Associated Press reported.

The ruling by the Administrative Court Thursday went into effect within an hour and stemmed from a lawsuit filed by two stock brokers concerned about the steep falls in the Kuwait Stock Exchange -- the Gulf Arab region's second largest bourse -- amid fallout from the global financial crisis.

The earlier sell-off across the Asia and Pacific region follows three straight down days on Wall Street.

So far this week, the Dow Jones Industrial Average has tumbled 661 points, or 7 percent. It was the lowest close for the blue-chip average since October 27.

Tech stocks were also lower, with the Nasdaq composite falling more than 5 percent, to its lowest level since 2003.

The Standard & Poor's 500 (SPX) index fell 5.2 percent.

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"This is the culmination of continued bad economic news," said Todd Morgan, senior managing director of Bel Air Investment Advisors, a Los Angeles-based firm. "A crisis of confidence and fear is driving the market."

No immediate improvement is expected on Wall Street on Thursday. U.S. futures, which offer an indication of how markets may open when trading begins in New York, were lower.

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