Turkish stocks slump 3.58 pct as rally loses momentum

The benchmark Istanbul Stock Exchange index extended its losses after 1.93 percent fall in morning trade as the lira declined nearly 3 percent and reached to 1.41 levels against the dollar.The yield on the benchmark June 23, 2010 bond also rose and closed at 20.71 percent.World stock markets mostly slumped on Wednesday. Investors took profits in Asia and Europe after stocks ended lower overnight on Wall Street, despite news that Washington would inject up to $250 billion into ailing banks to help end the worst financial crisis since the 1930s.One bright spot was Tokyo, which ended up 1.06 percent, building on Tuesday's record 14 percent surge. But Hong Kong closed down 5 percent, Seoul slid 2 percent and Sydney ended 0.9 percent lower.In midday European trade, London slid 2.95 percent, Frankfurt lost 2.07 percent and Paris was down by 2.18. Madrid declined 1.54 percent and Zurich dropped 1.92 percent.RECESSION FEAR MOUNTS
Fears grew Wednesday that the financial crisis will mutate into a worldwide recession with leaders calling for new global action against a slowdown.As EU leaders gathered for a summit devoted to the financial turmoil, a top U.S. central bank official said the United States appeared to be already in recession.Janet Yellen, president of the San Francisco Federal Reserve, said "virtually every major sector of the economy has been hit by the financial shock".She said recent data indicated there was "essentially no growth at all" in the world's biggest economy and "growth in the fourth quarter appears to be weaker yet, with an outright contraction quite likely".Japan's Prime Minister Taro Aso has already said he has "huge fears" for the future of the second biggest economy and German Chancellor Angela Merkel said the third economic giant faces a major test of its strength."We must prepare ourselves for a weakening of growth in Germany. But I'm convinced that the slowdown will not prove a long-lasting one," Merkel said as she urged the German parliament to pass a 480 billion euros ($655 billion) bank rescue package. Photo: AP