Global stocks fall as U.S. recession fears grip

By Ian Chua

LONDON (Reuters) - Shares from Sydney to London sank for a second day on Tuesday, dragging commodity prices with them and promising a woeful start for Wall Street as investors dumped assets exposed to the risk of a global economic slowdown.

European stocks, while off early lows, were down more than 1 percent after Japan's benchmark Nikkei lost 5.7 percent -- the worst one-day loss since the session after the September 11, 2001 attacks on the United States -- while MSCI's measure for other Asian stocks tumbled more than 7 percent.

"We're in the midst of very bearish sentiment. There's a lot of fear in this street and worldwide," said Tom Hougaard, chief market strategist at City Index Markets.

"Everyone is so keen to get rid of their stocks now, which of course is a good buying opportunity."

MSCI's main world stock index slid 1.8 percent, plumbing depths last seen in October 2006.

Shanghai copper and zinc futures fell by their 4 percent daily limit as fears that the risk of a U.S. recession could eat into global growth killed the appetite for raw materials. London's Brent crude oil contract slid more than $1 to $85.86 a barrel.

Comments from IMF Managing Director Dominique Strauss-Kahn on Monday that all developed countries were suffering from the U.S. slowdown entrenched fears that global growth was hitting a wall.

Adding to the gloom, billionaire investor George Soros said the world was facing the worst financial crisis since World War Two and the United States was threatened with recession.