World stocks tumble on Wal-Mart profit warning

European stock markets extended losses Thursday on predictions Wall Street will open sharply lower following profit warnings from Wal-Mart Stores Inc., the world's biggest retailer, and department stores chain Macy's Inc.

Wal-Mart said December sales at stores open for at least a year rose only 1.7 percent when stripping out fuel sales, worse than analysts' estimates. The company slashed its forecast for fourth-quarter earnings. Macy's likewise lowered earnings estimates as it revealed falling sales in December.

Following the brace of bad news, the FTSE 100 index of leading British shares was down 78.94 points, or 1.8 percent, at 4,428.57, despite another half percentage point interest rate reduction from the Bank of England, which took the benchmark rate to an all-time low of 1.5 percent.

Meanwhile Germany's DAX fell 82.86 points, or 1.7 percent, to 4,854.61, while France's CAC-40 was down 71.64 points, or 2.1 percent, to 3,274.45.

European markets were already lower after hefty U.S. losses Wednesday due to a profit warning from Intel Corp., the world's biggest chip-maker, and an employment survey predicting that the private sector shed a greater-than-expected 693,000 jobs in December. That frayed nerves ahead of Friday's official employment report from the government.

The Dow Jones industrial average, which tumbled 245.40, or 2.7 percent, to 8,769.70 on Wednesday, was expected to open sharply lower at the bell. Dow futures fell 107 points, or 1.2 percent, to 8.637, while Standard & Poor's 500 futures were 9.4 points, or 1 percent, lower at 895.80.

"In the last 24 hours, the equity markets have taken heed of the warnings and I think the likelihood is that we get a a grim jobs report that highlights the rise in the U.S. unemployment rate," said Neil Mackinnon, chief economist at ECU Group.

"The markets, which rallied in the run-up to the year-end on hopes that monetary and fiscal stimulis would bring a recovery in the second half of the year, have now hit a brick wall," he added.

Earlier, every major market in Asia posted a fall, marking an end to a New Year's rally that had been spurred by speculation that massive government spending and low interest rates would lead to an economic rebound later this year.

Tokyo's Nikkei 225 stock average lost 362.82, or 3.9 percent, to 8,876.42, snapping a seven-day winning streak as the yen traded higher, and Hong Kong's Hang Seng Index fell 571.55 points, or 3.8 percent, to 14,415.91.

South Korea's Kospi shed 1.8 percent, while Australia's benchmark dropped 2.3 percent and Taiwan's key index lost 5.3 percent. India's market, which plunged Wednesday after the chairman of major outsourcing company Satyam Computer admitted doctoring the firm's accounts for several years, was closed for a holiday.

As in the U.S., news on the corporate front in Asia was grim.

Shares in Lenovo Group plunged more than 26 percent in Hong Kong trade after the world's fourth-largest computer maker warned it expects a loss for its latest quarter and will lay off 11 percent of its workforce and cut executive pay.

Meanwhile, Cathay Pacific, Asia's No. 3 carrier, said it could lose nearly $1 billion from bad hedges on jet fuel and reiterated its profit warning for 2008, saying passenger and cargo traffic had weakened significantly. Cathay's shares shed 7.6 percent in Hong Kong.

In Australia, shares in Macquarie Group Ltd dropped 3.7 percent after the country's leading investment bank said "exceptionally challenging" market conditions in the fourth quarter would hurt profits.

Light, sweet crude for February delivery fell 93 cents to $41.79 a barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $5.95 overnight to settle at $42.63.

In currencies, the dollar weakened 1.5 percent to 91.26 yen, while the euro traded 0.1 percent lower to $1.3622.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.