FTSE drops 3% as global sell-off expands into Europe

FTSE drops 3% as global sell-off expands into Europe

Benchmark U.S. crude fell 56 cents to $63.59 per barrel in electronic trading on the New York Mercantile Exchange.

The blue-chip Dow Jones Industrial Average closed up 2.3 percent at 24,912.77. The Dow fell sharply on Friday and Monday, erasing the market's gains for 2018. On Tuesday, the key market gauge plummeted 1,071.84 points.

But within minutes, a fierce battle appeared to be playing out between those betting on further declines and those who thought that the market correction had gone too far, leading to some wild price gyrations. The decline was overdue, according to David J. Kostin, chief US equity strategist, at Goldman Sachs. This pushed the S&P 500 up 5.9%, marking its best start to the year since 1987, prior to the recent pullback. Kostin wrote in a research note earlier this week.

The Dow is still up 21 percent over the past 12 months, and the S&P 500 is up 15 percent.

The Dow is up 174.13 points, or 0.7 percent.

Japan's Nikkei 225 index dropped as much as 5.6 percent in early trading Tuesday.

On the flip side, Japan Tobacco is losing more than 3 percent, Mitsui Engineering & Shipbuilding is lower by more than 2 percent and Marubeni Corp.is down more than 1 percent.

U.S. equity markets had been in a euphoric state since President Donald Trump passed his historic Tax Cuts and Jobs Act reform, which saw corporation tax cut from 35% to 21%.

Investors were disappointed at the market's failure to rise further amid the emergence of selling on a rally, market sources said, adding stocks bowed to futures-led selling in the afternoon. Investors could have taken some hints from the rising 10-year bond yields and the widening volatility index that suggest a higher interest rate is looming.

Analysts have said the unravelling of popular volatility-linked trading strategies also added fuel to the sell-off. There hasn't been one in two years, and by many measures stocks have been looking expensive.

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Bitcoin also bounced back, buying $7,335 after briefly falling to a three-month low below $6,000 Tuesday.

Japan's Nikkei 225 Stock Average plunged by more than 7 percent in early trading on Tuesday, suffering its biggest one-day points-drop since 1990. The Nasdaq composite lost 14 points, or 0.2 percent, to 7,225.

The Dow is down 627.61 points, or 2.5 percent.

A 10 percent drop from a peak is referred to on Wall Street as a "correction".

The softness of markets over the last few days is down to one thing.

Asian stocks plunged on February 6 after the record-breaking loss on Wall Street, extending a global rout as panicked investors fret over rising US borrowing costs and take profits after months of market euphoria.

The U.S. dollar was flat at 109.12 yen.

Furukawa Electric declined 6.2 per cent, Yokogawa Electric dropped 6.3 percent and Sumitomo Electric Industries fell 6.2 per cent.

Energy firms soared after being pummelled in the previous day, with a pick-up in oil prices providing support after a report showed United States stockpiles not increasing as much as forecast.

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