Recession ends but markets fall

Japan may be officially out of recession, but regional investors are still cautious, with East Asian markets closing lower in Monday trading.

Economists believe the falls are linked to the latest consumer data from the US, which showed that shoppers there are not yet ready to start spending.

Japan's export-oriented industry relies heavily on US demand.

China's main Shanghai index fell 5.8% to 2,870.63, while Japan's Nikkei 225 fell 328.72 points (3.1%) to 10,268.61.

However, the Nikkei is still up by almost 900 points since mid-July.

Hong Kong's Hang Seng and South Korea's Kospi also fell and the price of US light, sweet crude fell below $66 a barrel - its lowest level this month. It fell $1.73 to $65.78.

"Production [in Japan] is still at a low level, and worries remain that employment conditions will worsen. So we must watch the downside risks," said Japan's economy and fiscal policy minister Yoshimasa Hayashi.

Japan's economy leaves recession

Japan has come out of recession after its economy grew by 0.9% in the April-to-June quarter.

The growth comes after four consecutive quarters of contraction.

Correspondents say the rise is due to a huge government stimulus package and it is unclear whether the momentum will be sustained when this is concluded.

Recent figures show other economies coming out of recession, including Germany, France and Hong Kong, a sign the global slowdown is easing.

Despite Japan exiting recession, the country's main share index, the Nikkei, fell back as the rate of growth was not as large as analysts had hoped.

If Japan's latest quarterly rate were maintained for a full year, the economy would grow 3.7%, but this was less than market expectations of 3.9%.

The Nikkei ended down 329 points or 3.1% to 10,269.

Sensex falls most in more than one month, melts 626 points

The BSE benchmark Sensex on Monday suffered most in one month by losing nearly 627 points on frantic selling by funds because of a steep fall in global markets and investors booking profits.

The Sensex, which notched up nearly a 1.71 percent gain in the previous week, plunged by 626.71 points at 14,784.92, the biggest fall since 6th July, the day the Budget was presented.



The index touched the day's low of 14,740.63. All the Sensex stocks closed with moderate to notable losses.

Similarly, the wide-based National Stock Exchange index Nifty lost 192.15 points at 4,387.90 as heavy-weights led by the realty sector showed hefty declines. The Nifty touched the day's low of 4,374.60 points.

Marketmen said the bourse tumbled here tailing weak Asian peers as concerns grew that global economic recovery may be more difficult than expected after data showed US consumer confidence fell to its lowest since March.

They said the selling wave was so strong that almost all sectoral indices showed biggest fall in recent times.

Market sentiment turned bearish also on reports of an international agency saying the stocks might decline up to 15 percent on concerns that lower monsoon rain would slash farm output and cut consumer spending.